ECONOMICS
GDP
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Government purchase of a new submarine
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Social security payments to a retired military officer
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The purchase of a homebuilt 10 years ago
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Contributions to a charity organization
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Work performed by a barber who cuts the hair of his or her own children
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Detailed explanation-1: -Government purchases include any spending by federal, state, and local agencies, with the exception of debt and transfer payments such as Social Security. Overall, government purchases are a key component of a nation’s gross domestic product (GDP).
Detailed explanation-2: -The expenditure approach to calculating gross domestic product (GDP) takes into account the sum of all final goods and services purchased in an economy over a set period of time. That includes all consumer spending, government spending, business investment spending, and net exports.
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: -The major items included in the calculation of GDP include business investment, net exports, individual consumptions, and government expenditures.