Computation of GDP by the Expenditures Method Would Include the Purchase

question 114

Multiple Choice

Computation of GDP by the expenditures method would include the purchase of:

• A) Fertilizer by a farmer
• B) Cement by a construction company
• C) Land by the U.S. Department of Interior
• D) Government bonds by a commercial bank

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Definitions:

Production

The process of creating goods or services using labor, machinery, and raw materials.

Price Taker

A market participant that accepts prevailing market prices as given, without having the power to influence these prices.

Competitive Market

A market structure characterized by many buyers and sellers, free entry and exit, and products that are similar, ensuring no single entity can control prices.

Profits

The financial gain achieved when the revenues generated from business activities exceed the expenses, taxes, and costs incurred in operating the business.