Describe what is included in each of the components of GDP. (You may exclude government spending.) Explain how each component of GDP is influenced (and why) by other variables in the economy.
Date Submitted: 09/09/2006 23:00:17
Category: / Social Sciences / Economics
Length: 2 pages (510 words)
Category: / Social Sciences / Economics
Length: 2 pages (510 words)
GDP = Consumption + Investment + Government + (Exports - Imports). Consumption spending by individuals, by far the largest portion of GDP (± 70%), includes goods and services used up in a relatively short period of time. These are goods and services which people buy on a regular basis, such as food, entertainment, rent, clothes, and gas. Investment spending accounts for the second largest portion of GDP (± 15%). These are goods and services that will provide …
Is this Essay helpful? Join now to read this particular paper
and access over 480,000 just like this GET BETTER GRADES
and access over 480,000 just like this GET BETTER GRADES
…will increase if U.S.: incomes, preferences for foreign goods, or prices of substitute goods increase. In other words, changes in net exports follow the law of supply and demand. If prices of substitute goods abroad rise, U.S. goods will become more attractive to everyone. Exports will rise and imports will fall. If prices of substitute goods rise in the U.S., then exports will fall and imports will increase for the same reasons.
Need a custom written paper? Let our professional writers save your time.