vI. Indicate which of the following is considered investment and will be include
ID: 1127041 • Letter: V
Question
vI. Indicate which of the following is considered investment and will be included in the investment component when calculating GDP. For all the expenditures that will not be included in the investment component brietly explain the reason (a) purchase of foreign currency; (b) firm's expenditures on the construction of a new house; for the construction of a new stadium; (d) household's purchase of a new county house built in the previous year; (e) firm's purchase of a piece of land to build a new workshop; (f) purchase of gold bars; (g) purchase of antiques; (h) firm's expenditures on the construction of its branch in another country; (i) purchase of the painting of Salvador Dali by the national museum; () purchase of a painting of a modern artist by a collector; (k) expenditures on a new car that a household plans to rent out; (1) firm's purchase of new equipment to replace the worn out machines; (m) purchase of shares issued by domestic firms; (n) purchase of securities issued by foreign companies; (o) purchase of government bonds; (p) expenditures on the construction of a new building of the Central bank; (q) purchase of a new flat that a household plans to rent out; (r) an increase in the stock of unsold goods produced by a firm; (s) foreign firm's expenditures on new equipment produced by domestic firms; (t) foreign firm's purchase of a controlling stake in the domestic firm (c) government subsidyExplanation / Answer
GDP general components included are ...1.Personal expenditure 2, Net exports 3.Government spending 4. Investments
From this we categories them from the question
a)foreign currency purchase
b) expenditure for constructing a new house
d)households purchase of new county house built in previous year
e)firms purchase of land to built workshop
f)purchase of gold bars
h) firms expenditure on the construction of its branch in another place
j) purchase of painting by a collector.
K) expenditure on new car to rent out
l) firm expenditure to repair worn out machines
n)purchase of securities by foreign companies
o) purchase of government bonds
p)expenditure on building central bank
q)purchase of new flat to be rented out
thereby almost contains personal expenditures , government expendtiture or business spending and imports and exports.
The one whcih are not included in GDP are
r), an increase in the stock of unsold goods produced by firms.( this donot come under any category of consumer spending)
i)purchase of painting of salvodar dali for the national mueseum( this is not government sending for the welfare of consumers)
c) government subsidy for construction of new stadium(it is a subsidy for the amount the builders pay so it is not an GDP component)
t) foreign firms purchase of controlling stake in domestic firm
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