What does (I) represent in the expenditure method?
Answer and explanation
Correct answer: Investment expenditure
In the expenditure identity GDP = C + I + G + (X − M), I denotes investment expenditure. It includes spending on fixed capital assets such as buildings and machinery, as well as changes in inventories. Imports are represented by M, exports by X, and taxes are not the meaning of I. Investment therefore adds to the economy’s capital stock or inventories.
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What is the correct answer to this question?
Investment expenditure
Why is this the correct answer?
In the expenditure identity GDP = C + I + G + (X − M), I denotes investment expenditure. It includes spending on fixed capital assets such as buildings and machinery, as well as changes in inventories. Imports are represented by M, exports by X, and taxes are not the meaning of I. Investment therefore adds to the economy’s capital stock or inventories.
Which subject and chapter does this question cover?
This is a Class 12 Economics question. Chapter: National Income and Related Aggregates. Topic: Methods of calculating national income - Expenditure Method.
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