In Calculating GDP Using the Expenditure Approach, the Largest Component

question 29

Multiple Choice

In calculating GDP using the expenditure approach, the largest component is

• A) consumption spending.
• B) government spending.
• C) investment spending.
• D) spending on durable goods.

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Definitions:

Entity Method

A consolidation approach where investments are recorded at the purchase cost, adjusted for the parent company's share in the subsidiary's post-acquisition profits or losses.

Gross Margin

A company's revenue minus its cost of goods sold, divided by revenue, expressed as a percentage, indicating the percentage of revenue that exceeds the cost of goods sold.

Inventory

Inventory comprises the goods and materials a business holds for the purpose of resale or production.

Consolidated Net Income

The total earnings of a corporation, after taxes and expenses, including its subsidiaries, presented in a single financial statement.