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A breakdown of the four components of GDP shows that

A. residential investment on new houses far exceeds spending by firms on new​ factories, office​ buildings, and machinery.
B. purchases made by the federal government far exceed purchases by state and local governments.
C. consumption is by far the largest expenditure​ category, and that consumer spending on services far exceeds consumer spending on goods.
D. the value of goods and services produced domestically and sold abroad typically far exceeds the value of goods and services produced abroad and sold domestically.

User Icguy
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2 Answers

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Final answer:

The largest component of GDP is consumption expenditure by households, which has risen from about 60% in the 1960s to roughly two-thirds of GDP in recent years, indicating the significant impact of consumer spending on the economy.

Step-by-step explanation:

When analyzing the breakdown of the four components of GDP (Gross Domestic Product), the correct statement is that consumption expenditure by households is by far the largest expenditure category. Consumer spending on services does indeed exceed spending on goods. The rise of consumer spending from about 60% of GDP in the 1960s to approximately two-thirds of GDP in more recent years demonstrates how significant consumer decisions are to the economy. Contrary to somes statements, residential investment does not far exceed business spending on new factories and machinery, federal government purchases are not necessarily larger than those of state and local governments, and the value of goods and services produced domestically and sold abroad does not typically far exceed those produced abroad and sold domestically.

User Justus Romijn
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Answer:

The answer is: C. Consumption is by far the largest expenditure​ category, and that consumer spending on services far exceeds consumer spending on goods.

Step-by-step explanation:

In the US Economy, consumption is by far the largest component of the GDP. Also, in the US economy, the most stable and largest component of consumption is services.

Consumption is calculated by adding all the new, finished, legal, durable and non-durable products and services expenditures.

  • During 2017, the GDP of the USA was $19.52 billion.
  • Approximately 68.4% of the GDP was Household Consumption.
  • Out of the total GDP, 80.2% were services.
User Biribu
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