ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The GDP calculation accounts for spending on both exports and imports. Thus, a country’s GDP is the total of consumer spending (C) plus business investment (I) and government spending (G), plus net exports, which is total exports minus total imports (X – M).

Detailed explanation-2: -The expenditure approach to calculating GDP is equal to the sum of consumer spending (C), government spending (G), business investments (I), and net exports (X-M). It is calculated the same as aggregate demand within an economy.

Detailed explanation-3: -The formula to calculate the components of GDP is Y = C + I + G + NX. 2 That stands for: GDP = Consumption + Investment + Government + Net Exports, which are imports minus exports. In 2019, U.S. GDP was 70% personal consumption, 18% business investment, 17% government spending, and negative 5% net exports.

Detailed explanation-4: -Gross domestic product at market prices aims to measure the wealth created by all private and public agents in a national territory during a given period. The most key aggregate of national accounts, it represents the end result of the production activity of resident producing units.