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Money & WorkHow it works

How to fit an entire economy into one formula.

The expenditure approach adds four items: private consumption, business investment, government spending and net exports, meaning exports minus imports. GDP = C + I + G + (X − M). Imports are subtracted because they already sit inside consumption and investment but weren't produced at home. If the figure rises only through prices, that's nominal growth; real growth subtracts inflation.

Useful: When you hear "growth", ask: nominal or real? The difference is inflation.

Source: de.wikipedia.org

BipStatistikWirtschaft

Difficulty:

Question on this card

Which item is NOT part of the GDP expenditure formula?

  1. Private consumption
  2. Government spending
  3. Exports minus imports
  4. Unpaid housework
Show the answer

Correct: Unpaid housework

Unpaid work isn't measured; the four items are C, I, G and net exports.

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