ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The formula for GDP is: GDP = C + I + G + (X-M). C is consumer spending, I is business investment, G is government spending, and (X-M) is net exports.

Detailed explanation-2: -Consumer spending is the largest component of Gross Domestic Product (GDP) and the target of Keynesian fiscal and monetary policy in macroeconomics. Other economists, sometimes known as supply-siders, accept Say’s Law of Markets and believe private savings and production are more important than aggregate consumption.

Detailed explanation-3: -C=Consumer spending on goods and services (final consumption expenditure or personal consumption) I=Investor spending on business capital goods (gross investment) G=Government spending on public goods and services (government consumption) X=Exports of goods. M=Imports of goods.

Detailed explanation-4: -Consumption: Refers to personal or consumer expenditures. In other words, it measures the dollar value of goods and services purchased by consumers. These items would include food, clothing, and landscaping services. Any new purchases by consumers can be counted as part of the GDP.