2.1 Expenditure Approach (2.2 pp 30-33)

Question 1

income expenditure identity

Answer 1

Y = C + I + G + NX

Question 2

consumption accounts for ____ of US GDP

Answer 2

2/3rds

Question 3

consumption expenditure has 3 categories

Answer 3

1. consumer durables (cars, tvs, furniture, appliances)
2. nondurable goods (food, clothing fuel)
3. services (education, health care)

Question 4

investment

Answer 4

spending for new capital goods (fixed investment) and inventory investment.

fixed =

1. business fixed investment (factories, equipment, office buildings, computers, furniture, software)
2. residential investment (spending money on constructing new houses and apartments)

Question 5

transfers

Answer 5

govt payments for social security and medicare, unemployment benefits - payments by the govt to individuals that are not made in exchange for G&S