For measuring GDP as spending on domestically produced final goods and services, spending on inputs like steel for manufacturing a car is counted in GDP, but spending on a new factory in which the cars are produced is NOT counted in GDP.

Question

Quizplus · Accepted Answer

Spending on a new factory is considered investment spending and it is actually included in GDP as it increases the productive capacity of the economy. It is not counted as final goods and services, but rather as a form of fixed investment.

For Measuring GDP as Spending on Domestically Produced Final Goods