Question

Which of the following might explain why GDP is higher this year than it was last year? Check all that apply.

a) Increased government spending
b) Decline in exports
c) Rise in consumer spending
d) Decrease in investment

Answer 1

a) Increased government spending. c) Rise in consumer spending. Increased government spending and rise in consumer spending would explain why GDP is higher this year than last year.

Step-by-step explanation:

To determine which of the given options would explain why GDP is higher this year than last year, we need to understand the components of GDP and how they are calculated.

GDP or Gross Domestic Product measures the total value of all final goods and services produced within a country in a specific period.

Based on this understanding, the options that would explain why GDP is higher this year than last year are:

1. Increased government spending: When the government spends more on goods and services, it directly contributes to GDP as government spending is one of the components. This would lead to an increase in GDP.
2. Rise in consumer spending: When consumers spend more on goods and services, it increases the overall demand and production in the economy, leading to an increase in GDP.

Therefore, options (a) Increased government spending and (c) Rise in consumer spending would explain why GDP is higher this year than it was last year.