ECONOMICS
BUSINESS CYCLES
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Consumption Expenditures
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Investment Expenditures
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Government Expenditures
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Net Imports
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Detailed explanation-1: -When using the expenditures approach to calculating GDP the components are consumption, investment, government spending, exports, and imports.
Detailed explanation-2: -Consumption expenditure by households is the largest component of GDP, accounting for more than two-thirds of the GDP in any year. This tells us that consumers’ spending decisions are a major driver of the economy.
Detailed explanation-3: -Examples of Final Products When a bakery makes cakes and other pastries, the raw materials are sugar, flour, milk, butter etc. The bases of the cakes, frosting, and fillings are part of the work-in-progress materials. At last, the final products are the cakes when decorated and ready to be sold to customers.
Detailed explanation-4: -Consumption is the largest component of the GDP. In the U.S., the largest and most stable component of consumption is services. Consumption is calculated by adding durable and non-durable goods and services expenditures.