Question

Which one of the following is not a component of total​ expenditures? A. Merchandise inventories. B. Consumption spending. C. Investment expenditures. D. Government purchases.

Answer 1

A. Merchandise inventories

Step-by-step explanation:

Total Expenditure is a Macro Economic concept, depicting spendings by all the sectors of an economy. It is also used as a National Income method.

4 Sectors of Economy : Households, Firms , Government, Rest of the World.

4 Expenditures by 4 sectors : Consumption Spending , Investment Expenditures, Government Purchases, Net Exports (respectively for all above sectors)

All except 'Merchandise Inventories' is is a part of Macro Economic Expenditure by 4 sectors of an Economy.

Answer 2

A. Merchandise inventories.

Step-by-step explanation:

The formula to compute the gross domestic product is shown below:

Gross domestic product = Consumption spending + Investment expenditure + Government purchase + Net exports

where,

Net exports = Exports - imports

So, the above items reflect the component of total expenditures

whereas the merchandise inventory is a current asset that shows on the asset side of the balance sheet