The Largest Component of GDP Using the Expenditure Approach Is

question 3

Multiple Choice

The largest component of GDP using the expenditure approach is

• A)investment.
• B)consumption expenditure.
• C)exports.
• D)government expenditure.
• E)imports.

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Definitions:

Law of Diminishing

refers to the principle that as one consumes more of a good, the marginal utility (or satisfaction) obtained from consuming an additional unit decreases.

Substitution Effect

The substitution effect occurs when consumers replace more expensive items with less costly alternatives, influencing demand patterns as prices fluctuate.

Utility-maximizing

The economic principle whereby consumers adjust their consumption of goods and services to achieve the highest level of satisfaction or utility.

Downward-sloping

Downward-sloping describes a curve or line on a graph that exhibits a decline from left to right, often used to illustrate decreasing prices or quantities in economics.