ECONOMICS
INFLATION
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Consumer spending increases, GDP increases
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Consumer spending increases, GDP decreases
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Investment spending increases, GDP increases
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Investment spending increases, GDP decreases
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Detailed explanation-1: -Increases in personal consumption expenditure, and private domestic investment were the main drivers of the GDP growth. Personal consumption was the largest factor of the GDP, by increasing by 7.9 percent from the previous year.
Detailed explanation-2: -In broad terms, an increase in real GDP is interpreted as a sign that the economy is doing well. When real GDP is growing strongly, employment is likely to be increasing as companies hire more workers for their factories and people have more money in their pockets.
Detailed explanation-3: -Tax changes have very large effects: an exogenous tax increase of 1 percent of GDP lowers real GDP by roughly 2 to 3 percent.
Detailed explanation-4: -Consumer spending drives a significantly large chunk of gross domestic product (GDP) in the United States. 3 If people cut down on purchases, then demand for goods and services will fall, squeezing company profits, the labor market, investment, and many other things that make the economy tick.