Which approach to calculating GDP would be best to compare consumer activity versus government purchases?
A) The expenditure approach
B) The income approach
C) The value-added approach
D) Any of these measurements will allow that comparison equally well.

Question

Quizplus · Accepted Answer

The expenditure approach would be the best for comparing consumer activity versus government purchases. This approach measures GDP by adding up all of the spending on final goods and services in the economy. Consumer activity is captured through consumption spending, while government purchases are captured through government spending. The income approach measures GDP by adding up all of the income earned by households and businesses in the economy, while the value-added approach measures GDP by adding up the value added at each stage of production. While both of these approaches measure different aspects of the economy and are useful in certain situations, neither would provide the most relevant information for comparing consumer activity versus government purchases.

Which Approach to Calculating GDP Would Be Best to Compare