ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -This is often written as C + I + G + (X-M), where C is personal consumption expenditures, I is investment, G is government purchases of goods and services, X is exports, and M is imports. Together, this is all of Gross Domestic Product, or GDP.

Detailed explanation-2: -The most important component of AD is consumer spending. This makes up around 60% of the AD figure. Therefore, factors effecting consumption such as interest rate changes can have a big impact on the overall AD value and therefore economic growth.

Detailed explanation-3: -Investment is a component of AD – AD+ C+I+G+X-M. Investment spending takes about 15% of AD; it is not as significant as consumer spending which is 61%.

Detailed explanation-4: -Answer: Capitalist economy is an economic system where the means of production are privately owned. These means of production are driven by the motive of profit making. This economic structure is also known as free market economy or laissez faire.