In which category of 2015 GDP would you find the following transaction. The Smiths purchase a new home built in Orlando in June of 2015 by a Japanese homebuilder.

GDP

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

In which category of 2015 GDP would you find the following transaction. The Smith’s purchase a new home built in Orlando in June of 2015 by a Japanese homebuilder.

A	Consumption
B	Investment
C	Government
D	Does not count in GDP

Explanation:

Detailed explanation-1: -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-2: -5. The four components of GDP are consumption, such as the purchase of a music CD; investment, such as the purchase of a computer by a business; government purchases, such as an order for military aircraft; and net exports, such as the sale of American wheat to Russia.

Detailed explanation-3: -When using the expenditures approach to calculating GDP the components are consumption, investment, government spending, exports, and imports.

Detailed explanation-4: -Consumption expenditure by households is the largest component of GDP, accounting for about two-thirds of the GDP in any year.

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ECONOMICS (CBSE/UGC NET)

ECONOMICS

GDP