Question

list and discuss in detail the components of GDP in general

Answer 1

In general there are four components of GDP :

a) Personal consumption expenditure : This is the private consumption of goods and services which is the disposable income spent after paying for taxes . It depends on the marginal propensity to consume .

b) Business investment : this is the investment expenditure of business firms .

c) Government spending : It is the demand for goods and services or expenditure done by government . Government income sources is from taxes .

d) Net exports : If it is an open economy then net exports is part of GDP . Net exports is equal to exports minus imports . It is the income earned through exports minus the money spent on imports from other countries .