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List four components of GDP
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GDP Gross domestic product (GDP) of a nation is comprised of four primary components. These components; consumption, investment, government spending and net exports are the measure of the monetary value of all the finished goods and services produced within a country's borders in over a given period of time. This can be broken down in any time frame but is normally used quarterly and annually. The GDP can be calculated as; GDP (Y) = consumption (C) + investment (I) + government spending (G) + net exports (NX) or Y=C+I+G+NX. The key word here is finished goods and not all goods. Consumption Household consumption, one of the four components of calculating the GDP of a nation has a broad range of items included in it. With the exception of the cost of buying a used house, most all durable and nondurable goods are measured within this. Mankiw (2012) described consumption as spending by households on goods and services, with the exception of purchases of new housing (p.497). The money a family spends on goods and services include everything from haircuts to education. Durable goods would be vehicles for transportation and all of the items that one buys to furnish a home. Items big and small regardless of brand or cost are factored in this component. If one was to buy and new set of appliances for a kitchen and a broom to sweep the floor, they are both used in this calculation. This is now adding to the consumption figures in this calculation. If one was to save this money for a while longer it would make the overall GDP lower than if the items were purchased. Education is often thought of as an investment in ones future but it is considered consumption by means of an intangible service for calculating GDP. Investment Investment from ... ... middle of paper ... ...bsolute gauge of a nation’s standard of living but it is a valuable equation that is fact based and data driven. Understanding what the purchased goods and services mean for one’s nation can help him or her understand the economy better. To know that a purchase from abroad is not always seen as a bad thing can help an individual determine when and from where a purchase can be made and what affect it may have in the overall direction of the GDP. References Barro, R. J., & Redlick, C. J. (2011). Macroeconomic Effects From Government Purchases and Taxes*. Quarterly Journal Of Economics, 126(1), 51-102. Mankiw, N. G. (2012). Principles of microeconomics. Mason, OH: South-Western Cengage Learning. Blodget, H. (2013). Business Insider. Here's Who To Blame For America's Lousy Economy... Retrieved from http://www.businessinsider.com/why-economic-growth-is-so-slow-2013-7
Gross domestic product (GDP) is one of the best ways to measure how a country’s economy is doing. A main component in figuring the GDP is personal consumption expenditures. Personal consumption expenditures accounts for about two-thirds of domestic
Over 80 percent of the goods and services purchased by U.S. consumers each year are made in the United States; the rest are imported from other nations. In addition to spending by private households and businesses, government agencies at all levels (federal, state, and local) spend roughly an additional $1.5 trillion a year. In total, the annual value of all goods and services produced in the United States, known as the Gross Domestic Product (GDP), was $9.25 trillion in 1999.
Lindsey, Lawrence B. “Did the Stimulus Stimulate?” The Weekly Standard. The Weekly Standard LLC. 16 Aug. 2010. Web. 25 April 2011
Gross Domestic Product (GDP) is an Economic Barometer which has being widely used around global to determine whether the country’s economy is under recession or expanding. It is a great tool for the government in aiding on making critical economy decision whether to input more money or remain in constant.
NERSISYAN, Yeva and L. Randall Wray (2010). Deficit Hysteria Redux? Why We Should Stop Worrying About U.S. Government Deficits. Nova York: The Levy Economics Institute, Public Policy Brief, Nº. 111. http://www.levyinstitute.org/pubs/ppb_111.pdf.
The reduction of government role in the economy will affect fiscal policy by decreasing deficit spending a...
Standard of Living, in a purely material dimension is the average amount of GDP per person in a country (therefore determining access to goods and services). However the term has a much broader, non-material dimension involving issues of quality of life and are therefore much more difficult to quantify. There is no single measure of SoL, but a range of indicators, which can be used together to give a good idea of a countries’ SoL. Reasons for GDP figures alone giving an incomplete understanding of SoL in a country will be explained in this essay, along with problems faced when comparing levels of development between countries.
Sahadi, J. (2008, January 7). How Bush may boost the economy. Retrieved September 5, 2008, from cnn: http://money.cnn.com/2008/01/04/news/economy/bush_economic_stimulus_options/index.htm
During the time of economic crisis starting around 2010 different rationalities have been taken to try and continue economic growth while maintaining a stable government system that is helping and not hurting. When examining government spending and how it affects the growth of the Gross Domestic Product (GDP) there seems to be disagreements on if it was helping or damaging the prospective growth that could be made. By using the Multiplier Effect the government can estimate how to adjust their government spending and how it effects the spending of the consumer, investments and spending of country’s exports.
McGrath, Maggie. "Blaming Global Economy, McDonald's Earnings Not So Golden." Forbes. Forbes Magazine, 21 Oct. 2013. Web. 11 Mar. 2014.
After analyzing the data and the theory, we have provided our conclusion weather tax cut is better for the stimulation of growth or Government spending is? This report explains the big macroeconomic debates of the present times. It seeks to explore the debate within fiscal policy itself between tax cuts and government spending. We have tried to explain the argument through some theories and through some data collected from Indian econ...
IMF Staff Position Note. (2009, March 6). The Case for Global Fiscal Stimulus. Retrieved from http://www.imf.org/external/pubs/ft/spn/2009/spn0903.pdf
GDP measures the total value of all goods and services produced within that territory during a specified period. GDP is used to measure a country’s wealth. Basic’s of life, food, etc. shelter and clothing is not likely available to most people in poorer countries. The.
All countries use the same measurement for GDP, so it is easy to compare one country’s economy to another. GDP is frequently used as a benchmark for the economic health of a country. One measure of GDP is the expenditure method, which is the most commonly used process. This method “totals consumption, investment, government spending and net exports.” (Investopedia.com)
The Gross Domestic Product (GDP) is the total market value of in a country’s output. The GDP is the total market value of all final goods and services produced by factors in within given period of time that located in the country doesn’t matter they are citizens or foreign-owned companies. Hence, the GDP is the best way to measure the country economy.