Hey guys,

Was doing a qbank and came across this question, where in the hell did they find this expenditure approach GDP formula. I thought GDP = C + I + G + X - M

But here comes some news elements liek statistical discrepancy, change in inventory…

Hey guys,

Was doing a qbank and came across this question, where in the hell did they find this expenditure approach GDP formula. I thought GDP = C + I + G + X - M

But here comes some news elements liek statistical discrepancy, change in inventory…

Greetings friend! Statistical discrepancy is included at the end of the GDP calculation but it’s not usually in CFA questions. If you see it in a GDP question, however, you can take this question as a reminder to include it at the end.

If you look at the core curriculum materials for components of GDP - you should see somewhere that the “I” comprises gross private (business) investment, which includes business investment in capital goods (plant and equipment etc.) and also changes in inventory (inventory investment). The “G” includes government spending on final goods and services and gross government investment. Here is a helpful additional link in case it helps too: The 4 Components of GDP Explained with Examples | Ifioque

The C and the X-M parts of the formula seem already familiar to you and are fairly self explanatory given the problem above.

Cheers - good luck - you got this

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Perfect. Thanks a lot Greybeard. Have a great week-end. And thanks for the encouragements, truly appreciate it.

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