The Expenditure Approach for the Calculation of GDP Includes Spending

question 4

Multiple Choice

The expenditure approach for the calculation of GDP includes spending on:

• A) consumption, investment, durable goods and exports.
• B) consumption, gross private domestic investment, government spending for goods and services, and exports.
• C) consumption, gross private domestic investment, government spending for goods and services, and net exports.
• D) consumption, net private domestic investment, government spending for goods and services, and net exports.

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Definitions:

Absorption Costing

A cost calculation method within accounting that assimilates all expenses incurred during manufacturing, covering direct materials, direct labor costs, and all overheads, whether fixed or variable, into the product’s price.

Income Statement

A financial statement that shows a company's revenue and expenses over a specific period, detailing net profit or loss.

Variable Manufacturing Costs

Costs that change in proportion to the level of production output, such as raw materials and direct labor costs.

Absorption Costing

An accounting method that includes all manufacturing costs - direct materials, direct labor, and both variable and fixed overheads - in the cost of a product.