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11 May, 19:08

Which of the following is included in the investment component of GDP?

a. Construction of a new commercial warehouse

b. Purchases of initial inventory to stock the shelves of a newly opened bookstore

c. Construction of a private residence

d. All of the above

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Answers (1)
  1. 11 May, 20:13
    0
    The correct answer is letter "D": All of the above.

    Explanation:

    The Gross Domestic Product (GDP) represents the overall market value of all the goods and services a country produces and measures the size of the economy over a certain period. The GDP takes into account government spending, private investments, consumption, and net export (exports minus imports).

    Private investment could be non-residential - tools, machinery, and factories - and residential - physical structures and equipment. Thus:

    A) Construction of a new commercial warehouse (Residential Investment).

    B) Purchases of initial inventory to stock the shelves of a newly opened bookstore (Non-residential investment).

    C) Construction of a private residence (Residential Investment).
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