TutorOn by Sanath Withanage

Question:

In an open economy model, the Gross Domestic Product is estimated as the sum of:
(1) final consumption expenditure, gross domestic capital formation and net exports.
(2) private consumption expenditure, government consumption expenditure and exports of goods and services.
(3) final consumption expenditure, gross domestic fixed capital formation and net exports.
(4) final consumption expenditure, gross domestic fixed capital formation, changes in inventories, and exports of goods and services.
(5) private consumption expenditure, gross domestic capital formation and net exports.

Correct Answer:

(1)

Answer Explanation:

In national income accounting, GDP by the expenditure approach is the sum of final consumption expenditure (private + government), gross domestic capital formation (fixed capital + inventory changes), and net exports (exports minus imports).

Topic: National Income Year: 2023