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CSS Micro Macro Economics P-I QUESTION #1694
Question 1
Among the following, which one is categorically NOT a component of Gross Domestic Product (GDP) calculated by the expenditure approach?
  • Consumption expenditure by households
  • Gross private domestic investment by firms
  • Government purchases of goods and services
  • The prevailing rate of unemployment✔️
Correct Answer Explanation
The expenditure approach to GDP is: \(\text{GDP} = C + I + G + (X - M)\), where \(C\) = household consumption, \(I\) = gross private investment, \(G\) = government purchases, and \((X-M)\) = net exports. The rate of unemployment is a labour market indicator and is not a component of GDP. It may be correlated with GDP (via Okun's Law) but is not included in its calculation.