Question

Which of the following is not correct?

a. Gross domestic product is both total income in an economy and total expenditures on the economy’s output of goods and services.
b. In a closed economy net exports are zero.
c. National saving is the sum of private saving and public saving.
d. Purchases of capital goods are excluded from GDP.

Answer 1

Answer:

Option (D) is incorrect

Explanation:

Gross domestic product is a monetary value of all finished goods produced in a country within a specific time. Purchases of capital goods are included on the GDP. More importantly, government purchases are an important aspect in the calculation of gross domestic product. Purchases of the current year are included and only purchases of previous years are excluded.