[amp_mcq option1=”Personal Consumption Expenditure” option2=”Gross Private Domestic Investment” option3=”Net Personal Income” option4=”Net Exports” correct=”option4″]
The correct answer is D. Net Exports.
Gross Domestic Product (GDP) is the market value of all final goods and services produced within a country’s borders in a specific time period, usually one year. It is the most widely used measure of the size of an economy.
GDP is calculated by adding up the following components:
- Personal Consumption Expenditure (PCE): This is the total amount of money that consumers spend on goods and services.
- Gross Private Domestic Investment (GPDI): This is the total amount of money that businesses spend on new capital goods, such as factories and equipment, and on inventory.
- Government Consumption Expenditure and Gross Investment (G): This is the total amount of money that the government spends on goods and services, as well as on investment in infrastructure.
- Net Exports (NX): This is the difference between the value of exports and the value of imports.
Net Exports is the only component of GDP that is not a direct measure of domestic economic activity. It is a measure of the difference between the amount of goods and services that a country produces and the amount of goods and services that it consumes. If a country exports more than it imports, then net exports will be positive. If a country imports more than it exports, then net exports will be negative.
Net exports are not a major component of GDP because they are not a direct measure of domestic economic activity. They are a measure of the difference between the amount of goods and services that a country produces and the amount of goods and services that it consumes.