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Principles of Macroeconomics (Mind...

8th Edition
N. Gregory Mankiw
Publisher: Cengage Learning
ISBN: 9781305971509
BuyFind

Principles of Macroeconomics (Mind...

8th Edition
N. Gregory Mankiw
Publisher: Cengage Learning
ISBN: 9781305971509

Solutions

Chapter
Section
Chapter 10, Problem 5CQQ
Textbook Problem
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Which is the largest component of GDP?

a. consumption

b. investment

c. government purchases

d. net exports

Expert Solution
To determine
The major component of GDP.

Explanation of Solution

The GDP is the summation of the monetary value of all the goods and services produced within the political boundary of a country, within a financial year. The expenditure is a main part of the GDP consideration because all the expenditures turn out to be someone’s income, which can be calculated in the GDP.

Option (a):

The expenditures made for the purpose of consumption of goods and services by the individual or the government is known as the consumption expenditure. It is a major component of expenditure which accounts for 70 percent of the total expenditure of the economy. Thus, it is clear that the correct option is option ‘a’...

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