ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The four components of gross domestic product are personal consumption, business investment, government spending, and net exports.

Detailed explanation-2: -Government purchases include any spending by federal, state, and local agencies, with the exception of debt and transfer payments such as Social Security. Overall, government purchases are a key component of a nation’s gross domestic product (GDP).

Detailed explanation-3: -GDP includes the final goods and services purchased by consumers or produced by producers. When computing GDP using the expenditure method, it will include the government purchases such that expenditure on infrastructure, labor, raw material, and so on.

Detailed explanation-4: -The official measure of GDP does not include measurements of leisure time available, nonmarket production, production in the underground economy, the distribution of income, or production externalities (e.g., pollution).