Which of the following is part of the expenditure approach to measuring national income?Multiple choice question.RentWagesInvestmentProfits
Question
Which of the following is part of the expenditure approach to measuring national income?
- Rent
- Wages
- Investment
- Profits
Solution
The expenditure approach to measuring national income includes all the money spent in an economy. This includes:
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Consumption: This is the total spending by households on goods and services, excluding purchases of new housing.
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Investment: This is the total spending on goods that will be used in the future to produce more goods and services. This includes business investments in equipment, and purchases of new housing.
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Government Purchases: This is the spending on goods and services by local, state, and federal governments.
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Net Exports: This is the spending on domestically produced goods by foreigners (exports) minus spending on foreign goods by domestic residents (imports).
So, from the options given, "Investment" is part of the expenditure approach to measuring national income.
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