Gross Domestic Product

Question 1

What does GDP measure?

Answer 1

The final value of all goods and services produced in the U.S..

Question 2

Why does GDP measure the final value and not intermediate value?

Answer 2

Because the intermediate costs of producing a good is included in the final product.

Avoid double counting.

Question 3

How many major components is GDP composed of?

Answer 3

4

Question 4

What are the major components of GDP?

Answer 4

Personal consumption expenditures, what consumers spend

Gross private domestic investment, what businesses invest in plant and equipment

Net exports, the difference between what the U.S. sells to foreigners and what the U.S. buys from them

Government consumption expenditures and gross investment