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Question 4 • Financial Math

A student knows that a country's households spent $400 billion last year on goods and services such as food, clothing, and health care. To calculate the country's GDP using the expenditure approach, what other data should the student investigate?

Answer
A
stock prices
B
business earnings
C
government spending
D
household income

Explanation

The expenditure approach adds spending on final goods and services by households, businesses, government, and foreign buyers (net exports). Household spending is already known, so government spending is one of the other useful amounts to investigate. Business earnings, stock prices, and household income are not expenditure categories in the GDP calculation.

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