ECONOMICS
GDP
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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included in GDP as investment.
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included in GDP as a consumption expenditure.
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not included in GDP as investment.
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not included in GDP because these are intermediate goods.
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Detailed explanation-1: -No, GDP does not measure the stock market. GDP measures personal consumption, business investment, government spending, and net exports.
Detailed explanation-2: -In calculating GDP, investment does not refer to the purchase of stocks and bonds or the trading of financial assets. It refers to the purchase of new capital goods, that is, new commercial real estate (such as buildings, factories, and stores) and equipment, residential housing construction, and inventories.
Detailed explanation-3: -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-4: -investment (I) when using the expenditures approach, “I” is the category of GDP that is spending businesses do in order to produce goods and services (such as buy computers for accountants to use or build factories to build cars); investment includes spending on capital goods (tools, equipment) and inventory.
Detailed explanation-5: -Intermediate goods that have been turned into final goods and services (e.g. tires on a new truck) Used goods. Transfer payments. Non-market activities. Illegal goods.