What Are the Four Components That Make Up GDP in the Expenditure

question 24

Multiple Choice

What are the four components that make up GDP in the expenditure approach?

• A) Consumption, Investment, Government Purchases, and Net Exports
• B) Consumption, Investment, Government Purchases, and Exports
• C) Capital, Investment, Government Purchases, and Net Exports
• D) Consumption, Income, Government Purchases, and Exports

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Definitions:

Significant Influence

The power to participate in the financial and operating policy decisions of an investee, but not control them, usually indicated by owning 20% to 50% of the voting stock.

Consolidated Financial Statements

Financial statements that combine and present a parent company's and its subsidiaries' financials as if they were a single entity, consolidating their assets, liabilities, income, and expenses.

Prior Period Adjustment

A prior period adjustment involves corrections of errors in previously issued financial statements, typically associated with the discovery of mistakes in accounting practices.

Equity Method

An accounting technique used to record investments in other companies, recognizing income and losses proportional to the level of ownership.