Question

which of the following expenditures would increase the investment component of us gdp a. you buy...

which of the following expenditures would increase the investment component of us gdp

a. you buy a new book about the financial markets
b. you purchase a new car
c. all the other choices would increase the investment component of US gdp
d. ibm buys an office chair
e. you purchase 1000 shares of ibm stock
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Answer #1

(d ) IBM buys an office chair

It is component of investment in US GDP.

It will be considered as fixed asset and a component of gross domestic fixed capital formation.

Investment expdt has 2 components:

(i) Gross domestic fixed capital formation

it included fixed assets purchased by producer like machinery ,furniture ,land,bridge ,dam ,house etc

(ii) Inventory investment or change in stock

it includes semi finished goods ,finished but unsold goods etc

(a) & (b) will be considered as personal final consumption expdt as car and books are purchased by final consumer.

They will be personal final consumption expdt.

(e) will not be included while calculating GDP because sale and purchase of shares does not circulate the flow of goods and services in current year.

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