The expenditure and resource cost-income approaches to calculating GDP arrive at the same final number, but they calculate that number in different ways. To illustrate, consider the possible effects of the following transactions on GDP:
1. Ralph pays The Home Station $1,200 to plant a new lawn in his backyard. He's attracted by The Home Station's guarantee that he'll be happy with the new lawn, or he'll get his money back.
2. The Home Station pays Al's Lawn Care $850 to plant the lawn.
3. Al's Lawn Care buys grass seed worth $200 from Green Center Nursery.
Compute contributions to GDP, using the expenditure approach. Assume that Green Center Nursery receives the grass seed at no charge and that other costs are zero.
Which of the following would be included in the expenditure method of calculating GDP? Check all that apply.
a. The Home Station spends $850.
b. Ralph spends $1,200.
c. Al's Lawn Care spends $200.
The total contribution to GDP, measured by the expenditure method, is $