Question : Which of the following is included in the calculation of GDP?
Option 1: Investment spending on stocks and bonds
Option 2: Government transfer payments
Option 3: Consumer spending
Option 4: Income earned by foreign nationals in the country
Correct Answer: Consumer spending
Solution : The correct answer is (c) Consumer spending.
Consumer spending is one of the components included in the calculation of Gross Domestic Product (GDP). GDP is a measure of the total value of all final goods and services produced within a country's borders during a specific period. It is commonly used as an indicator of a country's economic performance.
The components of GDP include:
a) Consumption spending: This represents the expenditure by households on goods and services, such as food, clothing, housing, healthcare, and entertainment.
b) Investment spending: This includes the spending on business investments, such as purchases of machinery, equipment, and structures, as well as spending on residential construction.
c) Government spending: This refers to the expenditure by the government on goods and services, such as public infrastructure, defense, education, and healthcare.
d) Net exports: This represents the difference between exports and imports. If a country's exports exceed its imports, it contributes positively to GDP, while if imports exceed exports, it has a negative impact on GDP.
