Question

ive just been told that gdp for the last year in our little country totaled $7340. in an open economy like ours that trades with others, gdp can be calculated with the expenditure method by adding together consumption expenditure (c), economic investment expenditure (i), government purchases (g) and net exports (nx). i noticed you say economic investment. what exactly does that mean here? economic investment includes items such as business purchases of new productive assets and household purchases of new homes. economic investment includes saving and purchases of financial instruments like stocks and bonds. submit gdp expenditure approach area 1.1 $gdp = c + i + g + nx$ $c = consumption expenditures$ $i = investment expenditures$ $g = government purchases$ $nx = net exports$

Explanation:

Economic investment in GDP calculation (using the expenditure method) refers to business purchases of new productive assets (like machinery for production) and household purchases of new homes. Saving and purchases of financial instruments (stocks, bonds) are not part of economic investment in this GDP - related context. The first statement about economic investment (business productive assets and new home purchases) is correct, while the second statement (including saving and financial instrument purchases) is incorrect.

Answer:

The first statement about economic investment (business purchases of new productive assets and household purchases of new homes) is correct. The second statement (economic investment includes saving and purchases of financial instruments like stocks and bonds) is incorrect.