Question

1.

The component of spending that is responsible for most of the GDP decline during recessions tends to be

		consumption
		investment
		government purchases
		net exports

2.

Social security payments fall under which category or categories of government expenditures (CHECK ALL ANSWERS THAT ARE CORRECT!)

		discretionary non-defense spending
		mandatory spending
		transfer payments
		discretionary defense spending

Between 2000 and 2018, what happened to the U.S. trade balance in services?

		the deficit increased
		began with a deficit and ended with a surplus
		the surplus increased
		began with a surplus and ended with a deficit

Answer 1

(1)

So there are four important components of GDP and they are consumption, investment, government purchases, and net exports, so even in a recession we have to look on our consumption as it is necessary for all and it is helpful in creating the demand in the economy, then the investment is always helpful for the economy as it also brings many new employment opportunities, then even if we have efficient trade balance it will be helpful for the economy but at the time of recession government expenditure has a severe impact on the economy because recession itself means that government doesn't have sufficient budget thus making an expenditure will further affect the economy.

Answer - Government Purchase

(2)

Social security payments mainly fall under the transfer payment made by the government for the welfare of its citizens

Answer - Transfer Payment

(3)

so if we will look on the data of the U.S trade balance in service it is around $ 74,266 in 2000 and then it rose to around $ 259,659 in 2018 thus we can say that the surplus has increased

Answer - The surplus increased