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    Question

    Which of the following is NOT a component of the expenditure approach to calculating Gross Domestic Product (GDP)?

    A Consumption expenditure (C). Correct Answer Incorrect Answer
    B Investment expenditure (I). Correct Answer Incorrect Answer
    C Government expenditure (G). Correct Answer Incorrect Answer
    D Net exports (NX). Correct Answer Incorrect Answer
    E Transfer payments. Correct Answer Incorrect Answer

    Solution

    The expenditure approach to calculating GDP includes consumption expenditure (spending by households), investment expenditure (spending by businesses), government expenditure (spending by the government), and net exports (exports minus imports). Transfer payments, such as social security benefits or unemployment compensation, are not included in GDP as they do not represent the production of new goods or services.

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