When Calculating GDP from the Expenditure Side, Which of the Following

question 57

Multiple Choice

When calculating GDP from the expenditure side, which of the following is true of the investment component, I_a?

• A)it excludes expansions of existing factories
• B)it includes changes in inventories
• C)it only includes business fixed investment
• D)it includes the transfer of houses between individuals
• E)it only includes decumulation of inventories

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Definitions:

External Benefit

An uncompensated benefit that an individual or firm confers on others; also known as positive externality.

Higher Costs

Expenses that exceed the usual or expected amount, which can negatively impact profitability and pricing strategies.

Plastics Manufacturing

The industrial process of producing polymers and polymer-based items, used in various applications from packaging to automotive parts.

Negative Externality

An economic activity that imposes a negative effect on an unrelated third party, often leading to market failure if not addressed, like pollution.