Question

To understand the use of scarce resources and to study the composition of GDP (Gross Domestic Product) among various types of spending, GDP is divided into which of the following components?
(A) Consumption
(B) Investment
(C) Governement Purchases and Net Exports
(D) Governement Consumption and Net Imports
Choose the correct answer from the following.

• A. (A), (B) and (C) only
• B. (B) and (C) only
• C. (A), (B), (C) and (D)
• D. (C) and (D) only

Hint:

The key components of GDP are Consumption, Investment, Government Spending, and Net Exports.

Answer 1

The Correct Option is A

Gross Domestic Product (GDP) comprises four primary components:
Consumption (A): Household expenditure on goods and services.
Investment (B): Expenditure on capital goods for future production.
Government Purchases and Net Exports (C): Government expenditures combined with the net balance of exports over imports.
Government consumption and net imports (D) is not recognized as a standard GDP component.