Question : The sum of consumption, investment, government expenditure, and net exports is equal to ______.
Option 1: Gross Domestic Product (GDP)
Option 2: Gross National Product (GNP)
Option 3: Net Domestic Product (NDP)
Option 4: Net National Product (NNP)
Correct Answer: Gross Domestic Product (GDP)
Solution : The correct answer is (a) Gross Domestic Product (GDP).
The sum of consumption, investment, government expenditure, and net exports is equal to Gross Domestic Product (GDP). GDP is a measure of the total value of all final goods and services produced within a country's borders in a given period, typically a year.
The components of GDP are as follows:
1. Consumption: It represents the spending by households on goods and services for personal use.
2. Investment: It refers to the spending by businesses on capital goods, such as machinery, equipment, and structures, to increase productive capacity or generate future economic benefits.
3. Government expenditure: It represents the spending by the government on goods, services, and public infrastructure.
4. Net exports: It is the difference between the value of exports and imports, reflecting the trade balance of a country.
By adding these components together, we obtain the total value of all goods and services produced in an economy, which is the Gross Domestic Product (GDP).
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