Question

What are the expenditure approaches to measuring US GDP? The following takes place in the US....

What are the expenditure approaches to measuring US GDP?

The following takes place in the US. (Ford a US automaker.)

1. Ford sells a car to US household.

2. Ford sells a car to someone in Taiwan.

3. Ford makes a car to be sold next year.

4. Ford sells a truck to a manufacturing firm, to be used in transporting goods.

5. Ford sells a car to the US government.

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Answer #1

GDP by Expenditure Method = personal consumption Expenditure + Gross private Investment + Government Spending + Net Exports (Export - Import)

1. Ford sells a car to US household will come under “Personal Consumption Expenditure”

2. Ford sells a car to someone in Taiwan is shown in “Exports”

3. Ford makes a car to be sold next year is shown in “Gross Private Investment” under change in inventory

4. Ford sells a truck to a manufacturing firm, to be used in transporting goods is shown in “Gross private investment”

5. Ford sells a car to the US government is shown in “ Government Spending”

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