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AICPA CPA-Business Exam - Topic 2 Question 72 Discussion

Under the expenditure approach, GDP can be calculated as the sum of:
D) Consumption, investment, government purchases, and foreign exchange.
A) Consumption, money supply, government purchases, and exports.
B) Consumption, investment, transfer payments, and imports.
C) Consumption, investment, government purchases, and net exports.

AICPA CPA-Business Exam - Topic 2 Question 72 Discussion

Actual exam question for AICPA's CPA-Business exam
Question #: 72
Topic #: 2
[All CPA-Business Questions]

Under the expenditure approach, GDP can be calculated as the sum of:

Show Suggested Answer Hide Answer
Suggested Answer: D

Choice 'd' is correct. Inspections. Inspections are part of order costs, not carrying costs.

Choices 'a' and 'c' are incorrect. Inventory carrying costs include all costs associated with warehousing (storing) inventory (e.g., storage, insurance, obsolescence, and spoilage associated with holding inventory).

Choice 'b' is incorrect. The economic cost of holding inventory includes the implicit (opportunity) cost of foregoing a return on the money invested in inventory.


by Lizette at Jul 25, 2023, 09:00 AM

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Destiny
8 months ago
I thought it included transfer payments too?
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Bernadine
8 months ago
Totally agree with C, it makes the most sense!
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Chau
8 months ago
Wait, are we sure about net exports? Sounds off.
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Alishia
8 months ago
Definitely C! That’s the standard formula.
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Tula
9 months ago
GDP = Consumption + Investment + Gov Purchases + Net Exports.
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Myrtie
9 months ago
I feel like D could be a trick option since foreign exchange isn’t typically part of GDP calculations, right?
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Gianna
9 months ago
I’m a bit confused; I thought transfer payments were included in GDP calculations, but maybe they’re not under the expenditure approach?
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Shawnee
9 months ago
I remember practicing a question similar to this, and I think it was about consumption and investment being key components.
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Emilio
9 months ago
I think the right answer might be C, but I’m not entirely sure about the net exports part.
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Remedios
9 months ago
I'm confident the answer is B. Motion. That's the element of waste that deals with unnecessary movement and transportation of materials.
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Dorothy
9 months ago
I vaguely remember that we discussed this in class; isn't it related to the time after a sale when payment comes in? So, maybe option A?
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Garry
10 months ago
Okay, I've got a strategy for this. I'll focus on the factbox option, as that seems like the most logical way to surface the related sales total data on the form. I just need to make sure I understand how to configure the factbox properly.
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Caitlin
1 year ago
B) Consumption, investment, transfer payments, and imports. Hmm, sounds like a recipe for a really depressing GDP calculation. Where's the fun in that?
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Lauran
1 year ago
D) Consumption, investment, government purchases, and foreign exchange. Ah, the good old 'foreign exchange' approach to GDP. I hear that's the preferred method in the Galactic Empire.
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Devorah
1 year ago
A) Consumption, money supply, government purchases, and exports. Wait, what? Money supply? That's definitely not part of the expenditure approach. I'm pretty sure my calculator has a GDP formula button, though.
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Audry
1 year ago
C) Consumption, investment, government purchases, and net exports.
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Helaine
1 year ago
A) Consumption, money supply, government purchases, and exports.
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Gregoria
1 year ago
B) Consumption, investment, transfer payments, and imports.
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Shelton
1 year ago
C) Consumption, investment, government purchases, and net exports.
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Kayleigh
1 year ago
B) Consumption, investment, transfer payments, and imports. Ah, the classic mistake of confusing the expenditure approach with the income approach. Gotta love these tricky GDP questions!
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Pamella
1 year ago
C) Consumption, investment, government purchases, and net exports. Understanding the different approaches to calculating GDP can be challenging, but it's important to grasp the concepts.
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Lourdes
1 year ago
B) Consumption, investment, transfer payments, and imports. It's easy to mix up the components, but with practice, you'll get the hang of it!
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Shawna
1 year ago
C) Consumption, investment, government purchases, and net exports. That's correct! The expenditure approach focuses on these components to calculate GDP.
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Camellia
1 year ago
I was sure it was D) Consumption, investment, government purchases, and foreign exchange. I should have paid more attention in my macroeconomics class.
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Brice
1 year ago
Bulah: Nope, it's C. Don't worry, it can be confusing sometimes.
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Bulah
1 year ago
User 2: Really? I thought it was D) Consumption, investment, government purchases, and foreign exchange.
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Shayne
1 year ago
User 1: It's actually C) Consumption, investment, government purchases, and net exports.
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Barrie
1 year ago
C) Consumption, investment, government purchases, and net exports. This is the correct answer as per the expenditure approach to calculating GDP.
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Eleonora
1 year ago
So, GDP is the sum of consumption, investment, government purchases, and net exports.
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Malcolm
1 year ago
That's right! The expenditure approach to calculating GDP includes those components.
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Quiana
1 year ago
I think the correct answer is C) Consumption, investment, government purchases, and net exports.
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Kenny
1 year ago
I'm not sure, but C seems to be the most logical choice based on the components of GDP.
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Francene
1 year ago
I agree with Aleta, C makes sense because it includes government purchases and net exports.
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Aleta
1 year ago
I think the answer is C.
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