One method of calculating Gross Domestic Product (GDP) is to add together
A) investment, consumption, gross profits, and net exports.
B) consumption, investment, government spending, and net exports.
C) wages, gross profits, net investment, and net exports.
D) consumption, wages, interest, rental income, and exports.

Question

Quizplus · Accepted Answer

GDP is calculated by adding together the total consumption, investment, government spending, and net exports of a country. This method, known as the expenditure approach, is widely used by economists and governments around the world to track the health of their economies. Option A is incorrect because gross profits are already included in the calculation of investment and government spending does not include any gross profits. Option C is incorrect because it only includes wages, gross profits, net investment, and net exports, leaving out government spending and consumption. Option D is incorrect because it includes interest and rental income which are already included in the consumption and investment categories respectively.

One Method of Calculating Gross Domestic Product (GDP) Is to Add