ECONOMICS
GDP
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Consumer spending
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Government spending
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Investment spending
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Net exports of goods and services
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Detailed explanation-1: -Consumption expenditure by households is the largest component of GDP, accounting for about two-thirds of the GDP in any year. This tells us that consumers’ spending decisions are a major driver of the economy.
Detailed explanation-2: -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-3: -“After that, you’ll learn the other approach for GDP splitting: factor income. Here, you’ll view GDP as the total sum of employee compensation, rents, interest, and profit. You’ll understand how GDP looks from the other side – from the receiving end of the ledger, instead of the spending end.