Questions and Answers
Which of the following is included in the components of GDP?
Business profit
What does Per Capita GDP measure?
The average income of the population
Which type of spending is considered 'investment spending' in GDP?
Business spending
What does high consumer spending often indicate about the economy?
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Which of the following is included in government spending in GDP?
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Study Notes
Components of GDP
- Consumption, Investment, Government Spending, and Net Exports are included in the components of GDP
Measuring GDP Per Capita
- Per Capita GDP measures the total output of a country's economy divided by its population, providing a rough estimate of the standard of living of citizens
Investment Spending
- Investment Spending refers to expenditure on capital goods, such as new housing, factories, and equipment, which is considered a key component of GDP
Consumer Spending
- High consumer spending often indicates a strong economy with low unemployment and high consumer confidence, as people are more likely to spend when they have a stable income and feel optimistic about the future
Government Spending
- Government Spending includes federal, state, and local government expenditures on goods and services, such as salaries, infrastructure, and social programs, which are included in GDP calculations
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