Question

Which of the expenditure components of GDP can be negative?

A. net exports.
B. consumption spending on durables.
C. consumption spending on services.
D. government purchases of goods and services.

Answer 1

Answer: The answer is net export

Step-by-step explanation:

GDP:: This is the amount of all goods and services produced in a country at a particular period of time, usually a year. However, in the calculation of GDP of a country consideration should only be given to the earning from citizens and foreign investment within the country. While earning from citizens and their investment outside the country should be excluded from the calculation of GDP. Gross domestic product(GDP) is used as a major determinant of the economic growth, decline or stagnation of a country. It is calculated as

GDP = C + I + G + (X-M)

If a country economy is buoyant it will show in the calculation of the country GDP for the year under review. On the other hand, if the economy is in a state of decline it will also show in the computation of the GDP of the country. Above all, if the economy is witnessing no growth at all for a certain period of time for example in a year, it also show in the computation of the country GDP.

Answer 2

Answer: A (Net exports)

Step-by-step explanation:

The correct answer is net exports because net exports are calculated using formula,

Net exports=Exports-imports

And if a countries imports increases by it's exports the resulting answer would be in negative. For example if a countries imports are 50$ and it's exports are 30$ then the net exports will be,

Net exports=30$-50$=-20$

Hence the negative net exports.