ECONOMICS
GDP
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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The tires that Ford Motor Company puts on a brand new car.
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McDonald’s buys a new fry machine
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The government buys ten new tanks
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A consumer purchases a 2005 BMW
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Detailed explanation-1: -Gross Domestic Product or GDP is referred to as the total monetary value of all the final goods and services produced within the geographic boundaries of a country, during a given period (usually a year). Gross Domestic Product is one of the most important indicators of the economic status of a country.
Detailed explanation-2: -GDP = consumption + investment + government spending + net exports. In this case, $200 million + 55 million + $120 million + $80 million + $45 million = $500 million. Then imports of $50 million is subtracted to get GDP = $450 million.
Detailed explanation-3: -If we talk about a simple approach, it is equal to the total of private consumption, gross investment, and government spending plus the value of exports, minus imports i.e. the formula to calculate GDP = private consumption + gross investment + government spending + (exports – imports).
Detailed explanation-4: -The Output Method (all value added by each producer), The Income Method (all income generated) and. The Expenditure Method (all spending).