Final answer:
Gross domestic product (GDP) is defined as A. consumer spending + government purchases + investment spending + exports - imports, which are the main components of GDP reflecting the demand side of an economy's output.
Step-by-step explanation:
Gross domestic product (GDP) is defined as the measure of the size of total production in an economy. It encompasses various components, including consumer spending (consumption), business spending (investment), government spending on goods and services, and the spending on net exports. So, the correct definition of GDP, in this case, is A. consumer spending + government purchases + investment spending + exports - imports. These components highlight who buys all of this production and reflect the demand side of the economy's output.
However, it's important to note that transfers are not included in GDP calculations, nor are financial spending or disposable income. Instead, the focus is on actual economic activity that results in goods and services being produced and consumed. Also, while counting the net exports, we look at exports minus imports because it measures the demand for domestically produced goods in a global economy, also known as the trade balance.