ECONOMICS
BUSINESS CYCLES
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Consumer spending, investment spending, government purchases, exports, and imports
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Consumer spending, investment spending, government purchases, and exports
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Consumer spending, consumption of fixed capital, government purchases and exports
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Consumer spending, inventory spending, government purchases and net exports
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Consumer spending, investment spending, government purchases and net exports
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Detailed explanation-1: -Aggregate demand is the sum of four components: consumption, investment, government spending, and net exports. Consumption can change for a number of reasons, including movements in income, taxes, expectations about future income, and changes in wealth levels.
Detailed explanation-2: -Gross domestic product (GDP) is the standard measure of the value added created through the production of goods and services in a country during a certain period. As such, it also measures the income earned from that production, or the total amount spent on final goods and services (less imports).
Detailed explanation-3: -GDP is the sum of all the final expenses or the total economic output by an economy within a specified accounting period. It does not include the output of its underground economy. Consumer spending comprises 70% of GDP.
Detailed explanation-4: -GDP can be measured using 1) the expenditures approach, 2) the income approach, or 3) the value added approach. The three approaches are equivalent-regardless of which approach you use you should end up with the same value.