12. The equation for GDP using the expenditure approach is A) GDP = C + I + G + B) GDP = C + I + G + C) GDP = C + I + G + (M D) GDP = C + I + G - X + M . E - M . - X ). X - M . Ans: CHECK WITH TEACHER. C is correct only if (X-M). See Slide 12 under National Income Accounting. Expenditure Approach measures GDP by adding together the market value of expenditures which consists of: ◦ Personal Consumption Expenditure ( C ) ◦ Gross Private Domestic Investment ( I g ) ◦ Government Purchases ( G ) ◦ Net Exports (NX)=X-M for a given year: GDP = C + I + G + NX 13.If a firm does not sell all of the goods that it produces in a given time period, then the goods 14.Which of the following is included as investment in GDP?i. cars produced during the year but unsold at the end of the yearii. new capital equipment produced and purchased during the yeariii. purchases of a company's stocks and bonds 5
15.Expenditures on U.S. produced steaks, shoes, and doctor visits are most likely classified as 16. A farmer buys a new tractor from John Deere to use on her cotton farm. This tractor is included in GDP as A) a service. B) a nondurable consumption good.C) part of investment. D) a durable consumption good.Ans:A is incorrect because a new tractor is not a service. It is a product/good.B and D are incorrect because it is not a consumption good.C is the correct answer.
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