Question

Assuming that the United States is the domestic economy, what are goods and services produced by and purchased by?

1) Consumers, businesses, and the government
2) Producers, consumers, and the government
3) Businesses, producers, and the government
4) Producers, businesses, and the government

Answer 1

Goods and services produced in the United States are purchased by consumers, businesses, and the government. These activities represent the consumption, investment, and government spending components of the GDP.

Step-by-step explanation:

In the context of the United States domestic economy, goods and services produced are purchased by various sectors. Breaking this down further, we see that consumption is conducted by consumers, investment by businesses, and spending on goods and services by the government. These are the key components that drive the economy and are tallied when calculating the Gross Domestic Product (GDP), ensuring not to double count by only focusing on the final output.

To answer the student's question directly, goods and services produced in the domestic economy are purchased by consumers, businesses, and the government, which corresponds to option 1. This illustrates the flow of economic activity within an economy and is essential for understanding how various entities interact and contribute to overall economic performance.