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In the expenditure approach to GDP ,which of the following would be excluded from measurements of...

In the expenditure approach to GDP ,which of the following would be excluded from measurements of GDP?#randomize
A. Government payments for goods produced by foreign firms
B. Government payments for goods produced by firms owned by state or local government
C. Government payments for welfare

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Answer #1

As we know that, GDP is the monetary value of all goods and services in an economy over a period of time. There are three methods of measurement of GDP.

Income method.

Expenditure method.

Production method.

The expenditure method measures the GDP by taking into account the total expenditure made by the households, business and Government. The expenditure method calculates the GDP by an equation.

GDP = C + I + G +(X-M).

C is Consumption.

I is investment.

G is government spending.

X-M is net exports.

In GDP we didn't include the factor income earned from abroad and the payments made to foreign firms in domestic econnomy.

The correct option is (a).

Government payments for goods produced by foreign firms.

Hope you got the answer.

Kindly comment for further explanation.

Thanks ?

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