Which of the following are included, when calculating GDP by the expenditure method?begin{enumerate}item Value of tyres sold by a tyre manufacturer to a car manufacture.item Amount of imports.item Amount spent on education by a household.end{enumerate} Select the correct answer using the codes given below:

BANKING GENERAL KNOWLEDGE

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Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]

Which of the following are included, when calculating GDP by the expenditure method?

A	Only 2
B	1 and 2
C	2 and 3
D	Only 3

Explanation:

Detailed explanation-1: -When using the expenditures approach to calculating GDP the components are consumption, investment, government spending, exports, and imports.

Detailed explanation-2: -The calculation of a country’s GDP encompasses all private and public consumption, government outlays, investments, additions to private inventories, paid-in construction costs, and the foreign balance of trade. (Exports are added to the value and imports are subtracted).

Detailed explanation-3: -The formula for calculating GDP with the expenditure approach is the following: GDP = private consumption + gross private investment + government investment + government spending + (exports – imports).

Detailed explanation-4: -Investment or Gross Investment (I)-expenditure by firms on capital equipment, inventories, factories, and machinery. It also includes all non-residential and residential construction (household purchases of new housing). It is also called fixed gross capital formation in the national accounts.

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