Question

An example of government spending when calculating the GDP using the expenditures approach is _____.

Responses

medical expenses
medical expenses

any investment expenditure by a government
any investment expenditure by a government

the purchase of a building
the purchase of a building

none of the above
none of the above

Answer 1

the purchase of a building

Explanation: In the expenditure approach GDP = C + I + G + (X − M). G includes government consumption and gross investment (e.g., buying a building or infrastructure). Transfer payments (and most private medical expenses) are not counted as government spending in GDP.