Answered: GDP is equivalent to: Consumption…

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter5: National Income Accounting

Section: Chapter Questions

Problem 2E

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Question

GDP is equivalent to:

Consumption

Price Level

Inflation

Investment

Real Income

Expert Solution

Step 1

The GDP measures the total spending on final durable goods and non-durable goods, and services produced in the country during a particular period of time. The GDP also determines the total income that is generated by producing products and services. The consumption and the investment are the part of GDP as they measured spending on the products and services by households and investment on capital goods, machinery etc. The price level and inflation have an effect on the GDP but they are not equivalent to the GDP. So, the GDP is equivalent to real income.

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