Gross Domestic Product Is Calculated by Adding Together

question 35

Multiple Choice

Gross Domestic Product is calculated by adding together

• A)the number of goods and services produced in the economy.
• B)money value of final goods and services.
• C)number of workers employed in national production.
• D)all commodities but not services produced in the economy.

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Definitions:

Marginal Propensity

The fraction of an additional amount of income that is spent on consumption. This is a key factor in determining the impact of an income change on the economy.

Aggregate Expenditures

The total amount of spending on goods and services in an economy at a given overall price level and in a given time period.

Spending Multiplier

the ratio of the change in total national income to the initial change in spending that brought it about, illustrating how initial spending leads to increased total spending in an economy.

Aggregate Spending

Aggregate spending is the total amount of spending in an economy, including consumption, investment, government expenditures, and net exports during a specific period.