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Both an increase in _____ and an increase in _____ can contribute to economic growth by increasing the Gross Domestic Product.


A.) imports, population

B.) debt, imports

C.) exports, government expenses

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Answer:

C.) exports, government expenses

Explanation:

GDP is the sum of all goods and services produced in a country over a given period of time. For GDP calculation, consumption, investment, public spending and trade balance (export minus import) are taken into account. Thus, increased government spending and increased exports tend to increase GDP. Conversely, if government cuts spending and exports fall, GDP tends to fall.

Note: It is important to think of government as a big consumer. If each good consumed by us is counted in GDP, everything the government consumes will also be counted in GDP.

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