Question

1) The Bureau of Economic Analysis divides it's statistics on GDP into four major categories. List the categories of expenditures and define each.

Answer 1

The Bureau of Economic Analysis divides the statistics on GDP into four main components:-

1. Personal Consumption Expenditure :- It is defined as the expenditure of the US households, it reveals the buying and purchasing patterns of the US consumers.High consumption leads to higher GDP growth in the short term wheres higher savings is good for long term economic health.
2. Business Investment :- It is defined as the purchases made by the business/ firms/ companies in order to produce new consumer goods.
3. Government Spending :- The government spending includes expenditures for the creation of infrastructure, subsidies, military spending etc.
4. Net Exports of Goods and Services :- It is defined as total exports substracted by the total imports in the the US, the exports add on the GDP whereas the imports substracts.