GDP

Front

What is GDP?

Back

GDP stands for Gross Domestic Product, which is the total monetary value of all finished goods and services produced within a country's borders in a specific time period.

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What are the components of GDP?

Back

The components of GDP are Consumption, Investment, Government Spending, and Net Exports (Exports - Imports).

Front

How does consumer spending affect GDP?

Back

Consumer spending is a major component of GDP; when consumers buy goods and services, it increases the overall economic activity and contributes to GDP.

Front

What is the difference between intermediate goods and final goods?

Back

Intermediate goods are used in the production of final goods, while final goods are the end products sold to consumers.

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Why are used items not included in GDP?

Back

Used items are not included in GDP because GDP measures the value of new production within a specific time period.

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What role do capital goods play in GDP?

Back

Capital goods are assets used by companies to produce goods and services; investment in capital goods can lead to increased production and higher GDP.

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What is the significance of where factors of production earn their wages and profit in GDP calculation?

Back

It matters because GDP accounts for the value generated within a country's economy, reflecting the income earned by labor and capital within that country.

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How does government spending contribute to GDP?

Back

Government spending on goods and services directly adds to GDP, as it represents a component of overall economic activity.

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What is net exports in the context of GDP?

Back

Net exports are calculated as the value of a country's exports minus the value of its imports; a positive net export contributes to GDP.

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What is the formula for calculating GDP?

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GDP = Consumption + Investment + Government Spending + (Exports - Imports).