Introduction

Expenditure on GDP versus gross domestic expenditure (GDE): Activities

1 Which one of the following is the appropriate concept if you are interested in the total value of spending within the borders of a country?

Correct.

Gross domestic expenditure indicates the value of total spending within the borders of a country. This is the spending by households, firms and government on final goods and services within the borders of a country and includes spending on imports.

Incorrect.

Expenditure on gross domestic product is the expenditure on final goods and services produced within the borders of a country. It gives you an indication of the value of the production of final goods and services. It includes spending on exports but excludes spending on imports.

Gross domestic expenditure indicates the value of total spending within the borders of a country. This is the spending by households, firms and government on final goods and services within the borders of a country and includes spending on imports.

Incorrect.

Gross national income gives you an indication of the income earned by all permanent residents of a country.

Gross domestic expenditure indicates the value of total spending within the borders of a country. This is the spending by households, firms and government on final goods and services within the borders of a country and includes spending on imports.

2 Which one of the following is the appropriate concept if you are interested in the total value of expenditure on goods and services produced within the borders of a country?

Incorrect.

Gross domestic expenditure indicates the value of total spending within the borders of a country. This is the spending by households, firms and government on final goods and services within the borders of a country and includes spending on imports.

Expenditure on gross domestic product is the expenditure on final goods and services produced within the borders of a country. It includes spending on exports but excludes spending on imports. It gives you an indication of the value of the production of final goods and services.

Correct.

Expenditure on gross domestic product is the expenditure on final goods and services produced within the borders of a country. It includes spending on exports but excludes spending on imports. It gives you an indication of the value of the production of final goods and services.

Incorrect.

Gross national income gives you an indication of the income earned by all permanent residents of a country.

Expenditure on gross domestic product is the expenditure on final goods and services produced within the borders of a country. It includes spending on exports but excludes spending on imports. It gives you an indication of the value of the production of final goods and services.

3 Which one of the following represents gross domestic expenditure?

Correct.

Gross domestic expenditure indicates the value of total spending within the borders of a country. This is the spending by households (C), firms (I) and general government (G) on final goods and services within the borders of a country. Note that included in C, I and G is spending on imports.

Incorrect.

This is expenditure on gross domestic product.

Gross domestic expenditure indicates the value of total spending within the borders of a country. This is the spending by households (C), firms (I) and general government (G) on final goods and services within the borders of a country. Note that included in C, I and G is spending on imports.

4 Included in the value of final consumption by households (C), capital formation (I) and general government expenditure (G) are the value of imports.

Correct. The statement is indeed true.

Expenditure on imports is included in C, I and G.

Incorrect. The statement is true.

Expenditure on imports is included in C, I and G.

5 Which one of the following represents expenditure on gross domestic product?

Incorrect. This is gross domestic expenditure.

Expenditure on gross domestic product is the expenditure on final goods and services produced within the borders of a country. It gives you an indication of the value of the production of final goods and services. It includes exports, since these are produced within the borders of the country, but excludes imports, since imports are expenditure on goods produced outside of the country.

Correct.

Expenditure on gross domestic product is the expenditure on final goods and services produced within the borders of a country. It gives you an indication of the value of the production of final goods and services. It includes exports, since these are produced within the borders of the country, but excludes imports, since imports are expenditure on goods produced outside of the country.

6 Expenditure on gross domestic product … exports and … imports.

Incorrect.

Expenditure on gross domestic product is the expenditure on final goods and services produced within the borders of a country. It includes exports, since these are expenditure by foreigners on final goods and services produced within the borders of a country, but excludes imports, since imports are expenditure on goods produced outside of the country.

In symbols C + I + G + (X – Z).

Correct.

Expenditure on gross domestic product is the expenditure on final goods and services produced within the borders of a country. It gives you an indication of the value of the production of final goods and services. It includes exports, since these are expenditure by foreigners on final goods and services produced within the borders of the country, but excludes imports, since imports are expenditure on goods produced outside of the country.

In symbols C + I + G + (X – Z).

Incorrect.

Expenditure on gross domestic product is the expenditure on final goods and services produced within the borders of a country. It gives you an indication of the value of the production of final goods and services. It includes exports, since these are expenditure by foreigners on final goods and services produced within the borders of the country, but excludes imports, since imports are expenditure on goods produced outside of the country.

In symbols C + I + G + (X – Z).

Incorrect.

Expenditure on gross domestic product is the expenditure on final goods and services produced within the borders of a country. It gives you an indication of the value of the production of final goods and services. It includes exports, since these are expenditure by foreigners on final goods and services produced within the borders of the country, but excludes imports, since imports are expenditure on goods produced outside of the country.

In symbols C + I + G + ().

7 Gross domestic expenditure … expenditure on exports and … expenditure on imports.

Correct.

Gross domestic expenditure indicates the value of total spending within the borders of a country. This is the spending by households (C), firms (I) and general government (G) on final goods and services within the borders of a country. Note that included in C, I and G is spending on imports, but it excludes expenditure on exports since this spending originates from the rest of the world.

Incorrect.

Expenditure on exports is excluded since it is expenditure that originates from the rest of the world. Expenditure on imports is included since it is part of the expenditure within the borders of a country.

Incorrect.

Gross domestic expenditure indicates the value of total spending within the borders of a country. This is the spending by households (C), firms (I) and general government (G) on final goods and services within the borders of a country. Note that included in C, I and G is spending on imports, but it excludes expenditure on exports since this spending originates from the rest of the world.

Incorrect.

Gross domestic expenditure indicates the value of total spending within the borders of a country. This is the spending by households (C), firms (I) and general government (G) on final goods and services within the borders of a country. Note that included in C, I and G is spending on imports, but it excludes expenditure on exports since this spending originates from the rest of the world.

8 If expenditure on GDP is greater than GDE, it follows that …

Correct.

The difference between expenditure on GDP and GDE is reflected in the difference between exports and imports of goods and services.

If expenditure on GDP = C + I + G + (X – Z) is greater than C + I + G, it follows that exports (X) must be greater than imports (Z).

Incorrect.

The difference between expenditure on GDP and GDE is reflected in the difference between exports and imports of goods and services.

If expenditure on GDP = C + I + G + (X – Z) is greater than C + I + G, it follows that exports (X) must be greater than imports (Z).

Incorrect.

The difference between expenditure on GDP and GDE is reflected in the difference between exports and imports of goods and services.

If expenditure on GDP = C + I + G + (X – Z) is greater than C + I + G, it follows that exports (X) must be greater than imports (Z).

9 Which one of the following is not a gross domestic expenditure item?

Incorrect.

Included in final consumption expenditure by households is their spending on imports.

Incorrect.

Included in investment spending by firms is their spending on capital goods produced in South Africa.

Incorrect.

Included in investment spending by firms is their spending on imported capital goods from the rest of the world.

Correct.

Expenditure on exports from South Africa is not part of the domestic expenditure since this expenditure originates from the rest of the world.

You are given the following information for a hypothetical country:

  • Final consumption expenditure by households (C): R280 million
  • Capital formation (I): R100 million
  • Final consumption expenditure by general government (G): R80 million
  • Exports (X): R60 million
  • Imports (Z): R65 million

10.1 Calculate the gross domestic expenditure for the country.

Correct.

Gross domestic expenditure = C + I + G = R280 million + R100 million + R80 million = R460 million.

Incorrect.

Gross domestic expenditure = C + I + G = R280 million + R100 million + R80 million = R460 million.

10.2 Calculate the expenditure on gross domestic product for the country.

Correct.

Expenditure on gross domestic product = C + I + G + (X – Z) = R280 million + R100 million + R80 million + (R60 million – R65 million) = R455 million.

Incorrect.

Expenditure on gross domestic product = C + I + G + (X – Z) = R280 million + R100 million + R80 million + (R60 million – R65 million) = R455 million.