ECONOMICS
GDP
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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The purchase of a used computer by a n auto manufacturer
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The purchase of a share of IBM stock by an employee
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The construction of a new house
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The construction of roads by the government
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The profit earned when selling shares of stock
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Detailed explanation-1: -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, business equipment, new commercial real estate (such as buildings, factories, and stores), residential housing construction, and inventories.
Detailed explanation-2: -Gross domestic investment The sum of gross private domestic fixed investment, the change in private inventories, and government gross investment.
Detailed explanation-3: -The formula for GDP is: GDP = C + I + G + (X-M). C is consumer spending, I is business investment, G is government spending, and (X-M) is net exports.
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.