An Example of ʺInvestmentʺ in Computing Real GDP Using the Expenditure

question 10

Multiple Choice

An example of ʺinvestmentʺ in computing real GDP using the expenditure approach is the purchase of

• A) 100 shares of IBM stock.
• B) computer chips by Dell to put in their personal computers.
• C) a 100 year old house by a married couple.
• D) a new set of tools by an auto mechanic, for use in repairing cars.

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Definitions:

Profitable Use

An application or deployment of resources in a manner that generates financial gain or returns above the initial cost.

Contribution Margin

The amount by which a product's selling price exceeds its total variable costs, contributing to covering fixed costs and generating profit.

Labor Hours

The total hours worked by employees for which they are compensated, often used in calculating labor costs in manufacturing.

Special Order

An order for goods or services that is not part of a company's regular offerings and is often customized or produced in a limited quantity.