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Brief Principles of Macroeconomics...

8th Edition
N. Gregory Mankiw
ISBN: 9781337091985

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BuyFindarrow_forward

Brief Principles of Macroeconomics...

8th Edition
N. Gregory Mankiw
ISBN: 9781337091985
Textbook Problem

List the four components of GDP. Give an example of each.

To determine

The different components of expenditure.

Explanation

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. There are mainly four components of expenditure and they are as follows:

(1) Consumption: 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. The best example is the purchase of a commodity such as a televisions, refrigerators, and so forth.

(2) Investment: It is the expenditure made for the purpose of investment by the individuals or the government...

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