GDP is calculated as the sum of which components?

• A. Consumption, Investment, Government Expenditure, Net Exports
• B. Unemployment, Inflation, GDP Deflator, Tax Revenue
• C. Interest Rates, Exchange Rates, Inflation, Employment
• D. Capital Expenditure, Personal Income, Trade Balance, Population

Answer: (A)

GDP measured by the expenditure approach sums up what households, firms, and the government spend on final goods and services, plus net exports. In formula form, it’s GDP = C + I + G + (X − M). Here C is consumption (household spending), I is investment (business spending on capital and residential investment), G is government spending on goods and services, and X − M (net exports) is exports minus imports. Net exports can be negative if imports exceed exports, which then lowers GDP through that term.

This framing uses four distinct spending categories that together capture total domestic demand for final goods and services. The other options mix in indicators (like unemployment and inflation), price measures (GDP deflator), or inputs that aren’t part of this four-component expenditure tally, so they don’t describe how GDP is calculated in the expenditure approach.