Question

When accounting for exports and imports in GDP, which of the following is correct?

A) Exports are added to the other categories of expenditures.
B) Imports are added to the other categories of expenditures.
C) Both exports and imports are added to the other categories of expenditures.
D) Both exports and imports are subtracted from the other categories of expenditures.

Answer 1

Imports are added to the other categories of expenditures when accounting for exports and imports in GDP.

Step-by-step explanation:

The correct option is B) Imports are added to the other categories of expenditures.

When accounting for exports and imports in GDP, imports are added to the other categories of expenditures. This is because imports represent spending on goods and services produced in other countries that are purchased domestically. By adding imports to the other categories of expenditures, we are able to capture the total spending on goods and services within a country's economy.