CA Foundation · Business Economics · Indian Economy
India's GDP is measured using three approaches: expenditure, income, and production. Which of the following is NOT included in the expenditure approach to calculating GDP?
Intermediate goods are not included in the expenditure approach to GDP because they would cause double counting. GDP measures only the value of final goods and services produced. Intermediate goods are inputs used to make final products and their value is already captured in the final product's price.
- AGovernment spending on infrastructure projects
- BPrivate consumption expenditure on goods and services
- CNet exports (exports minus imports)
- DIntermediate goods used by manufacturersCorrect
Explanation
The expenditure approach to GDP includes consumption (C), investment (I), government spending (G), and net exports (X-M). Intermediate goods are excluded to avoid double counting, as they are already reflected in the final goods' value. Options 1, 2, and 3 are all valid components of the expenditure formula.
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