Which of the following scenarios correctly illustrate the components of Gross Domestic Product (GDP) using the Expenditure Approach?
1. A government investing in the construction of a new airport.
2. A household purchasing a newly built apartment.
3. A company acquiring advanced machinery to boost production.
4. A retailer importing electronics for resale.
5. An individual exchanging foreign currency in the forex market.

Select the correct answer using the code given below:
(a) 1, 2, 3, and 4 only
(b) 1, 2, and 3 only
(c) 2, 4, and 5 only
(d) 1, 2, 3, 4, and 5

Question

Which of the following scenarios correctly illustrate the components of Gross Domestic Product (GDP) using the Expenditure Approach?
1. A government investing in the construction of a new airport.
2. A household purchasing a newly built apartment.
3. A company acquiring advanced machinery to boost production.
4. A retailer importing electronics for resale.
5. An individual exchanging foreign currency in the forex market.

Select the correct answer using the code given below:
(a) 1, 2, 3, and 4 only
(b) 1, 2, and 3 only
(c) 2, 4, and 5 only
(d) 1, 2, 3, 4, and 5

ONLiNE UPSC · Accepted Answer

The Expenditure Approach to GDP includes the following components:
Government Spending (G): Public sector investment in infrastructure, such as building an airport, contributes to GDP.
Investment (I): Purchasing a newly built apartment counts as investment in GDP, as it adds to capital formation.
Business Investment (I): When companies buy new machinery, it is classified under private investment.
Net Exports (NX): Imports are subtracted from GDP; they are not a part of expenditure tracking.

Financial transactions like exchanging foreign currency are not included in GDP calculations because they do not involve the production of goods or services. They are simply transfers of financial assets.

Hence all three transactions in the Statement 1, 2, and 3 are components of Gross Domestic Product (GDP) using the Expenditure Approach.

Min. Time: 1 S Max Time: 3 S
M Question 1	⏱ 0
Which of the following scenarios correctly illustrate the components of Gross Domestic Product (GDP) using the Expenditure Approach? 1. A government investing in the construction of a new airport. 2. A household purchasing a newly built apartment. 3. A company acquiring advanced machinery to boost production. 4. A retailer importing electronics for resale. 5. An individual exchanging foreign currency in the forex market. Select the correct answer using the code given below: (a) 1, 2, 3, and 4 only (b) 1, 2, and 3 only (c) 2, 4, and 5 only (d) 1, 2, 3, 4, and 5

Macroeconomics

Gross Domestic Product (GDP) - Expenditure Approach

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