Expenditures Approach to GDP Flashcards
1
Q
How is GDP divided?
A
GDP is divided into the categories of buyers in the market.
2
Q
Who are the buyers in the market? (BGF Home)
A
- Businesses
- Government
- Foreign buyers
- Household consumers
3
Q
What does the formula look like?
A
GDP = C + Ig + G + Xn
4
Q
Personal Consumption Expenditures (C)
A
- durable goods
- nondurable goods
- services
5
Q
Gross Private Domestic Investments (Ig)
A
- all final purchases of machinery, equipment, and tools by businesses
- all construction (including residential)
- changes in business inventory
- non-investment transactions
- Net Private Domestic Investment (In)
6
Q
Government Purchases (G)
A
- includes spending by all levels of gov’t ( federal, state, local)
- includes all direct purchases of resources
- excludes all transfer payments
7
Q
Net Exports (Xn)
A
- all spending on final goods
- imports are excluded
Xn = exports - imports
