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49. CPA-05252 Released 2006 Page 14 All of the following are components of the formula used to calculate gross domestic product, except:
a. Household income. b. Foreign net export spending. c. Government spending. d. Gross investment. CPA-05252 Explanation Choice "a" is correct. Gross domestic product (GDP) is calculated in two different ways. The first, which is the expenditure approach and can be used to answer this question, is the mnemonic GICE, or government purchases plus private domestic investment plus personal consumption expenditures plus net exports. Household income is the only one of the answers that is not included in this mnemonic. Choice "b" is incorrect. Foreign net export spending is included in the mnemonic (E) for GDP; although, it is called simply net exports in the mnemonic and not foreign net export spending. Choice "c" is incorrect. Government spending is included in the mnemonic (G) for GDP. Choice "d" is incorrect. Gross investment is included in the mnemonic (I) for GDP, although it is called private domestic investment in the mnemonic. CPA-05254 Type1 M/C A-D Corr Ans: C PM#36 B 2-02 50. CPA-05254 Released 2006 Page 14 Gross domestic product includes which of the following measures?