Components

Question 1

what is agg expenditure

Answer 1

sum of all expenditure on final goods/services undertaken in the economy during a specific time
AE = C + I + G + (X-M)

Question 2

what % of GDP does consumption make up and what are its 3 ocmponents and corresponding %

Answer 2

55% of GDP

1. expenditure on non durable goods - 35%
2. expenditure on durable goods - 15%
3. expenditure on services - 55%

Question 3

define and give examples of:

1. non durable goods
2. durable goods
3. services

Answer 3

1. cosnumed up to 3 years after purchase (food/clothing/footwear/’essential goods’)
2. lasts more than 3 years (white/brown goods - computers/fridges, furniture, ‘discretionary spending)
3. education/transport/health - some essential, some discretionary

Question 4

what % of GDP does investment make up and what is it

Answer 4

17.9% - spending on new capital and additions to inventories

Question 5

what are examples of investment

Answer 5

1. business investment: priv funded business spending on capital goods
2. housing investment
3. inventories: unsold goods (stocks)

Question 6

what % of GDP does gov exp make up

what % of GDP does net exports make up

Answer 6

gov: 25.5% of GDP
exports: 2.3% of GDP

Question 7

what are the 2 components of gov exp

Answer 7

G1: current spending (day to day business of god like wages and salaries, purchase of g/s)
G2: capital spending (productive machinery/public infrastructure)