Given that GDP is a measure of what is produced in a country, explain how the expenditure approach can measure GDP. How are items produced, but not yet sold, accounted for in the expenditure approach?

The expenditure approach measures GDP by summing the purchases of final goods and services by the four sectors of the economy. This is a reflection of production because an item can not be purchased unless it has been produced. Even items that have been produced, but not yet sold, are accounted for in the expenditure approach because national income accountants assume that anything that is produced but not sold to consumers is bought by the firm that produced it. These items would show up as part of the firms' inventory, and therefore would be counted as part of investment.