What type of expenditure contributes to the measurement of GDP through household spending?

The correct answer, which is consumption, refers to the total spending by households on goods and services. This category includes everyday purchases such as food, clothing, healthcare, and entertainment. Consumption is a significant component of Gross Domestic Product (GDP) because it reflects consumer demand and contributes heavily to overall economic activity.

In the context of GDP, consumption captures a vast array of household expenditures, making it a crucial indicator of the economy's health. Since households are considered the primary drivers of demand within an economy, an increase in consumption usually signals economic growth, while a decline might indicate a recession or economic slowdown.

This understanding positions consumption as a foundational element in the calculation of GDP, separate from other expenditures such as government spending, net exports, and investment. Government spending reflects public sector expenditures, net exports comprise the difference between a country's exports and imports, and investment includes spending on capital goods, which are not directly tied to household spending.