AP Macroeconomics Question 235: Answer and Explanation

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Question: 235

2. Which of the following is NOT included in GDP?

  • A. Federal government purchases of goods and services.
  • B. Imports.
  • C. State and local government purchases of goods and services.
  • D. Exports.
  • E. The change in business inventories.

Correct Answer: B

Explanation:

(B) Consider the equation GDP = C + I + G + X. X is exports minus imports. So exports are included in GDP, but imports are subtracted out. G is federal, state, and local government purchases; I is business spending on plant and equipment plus the change in business inventories.