peter_dominguez
peter_dominguez 20h ago โ€ข 0 views

Test Your Knowledge: Components of GDP (C+I+G+NX) Quiz for Students

Hey there, future economists! ๐Ÿ‘‹ GDP can seem a bit abstract, but it's actually super important for understanding how our economy is doing. Let's break down the components of GDP (C+I+G+NX) and then test your knowledge with a quick quiz. Good luck! ๐Ÿ€
๐Ÿ’ฐ Economics & Personal Finance

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scottgalvan1991 Jan 1, 2026

๐Ÿ“š Quick Study Guide

  • ๐Ÿ  Consumption (C): Represents spending by households on goods and services. This includes everything from groceries ๐ŸŽ and haircuts ๐Ÿ’‡โ€โ™€๏ธ to cars ๐Ÿš— and medical care ๐Ÿฉบ. It's usually the largest component of GDP.
  • ๐Ÿญ Investment (I): Refers to spending on capital goods, inventories, and structures. Think of businesses buying new equipment ๐Ÿ’ป, building new factories ๐Ÿข, or increases in unsold goods sitting in warehouses ๐Ÿ“ฆ. Note that financial investments (like stocks and bonds) are NOT included in GDP.
  • ๐Ÿ›๏ธ Government Purchases (G): Includes spending by federal, state, and local governments on goods and services. This covers things like national defense ๐Ÿš€, infrastructure projects ๐Ÿšง, and public education ๐Ÿซ. Transfer payments, such as Social Security or unemployment benefits, are NOT included in GDP since the government isn't receiving goods or services in return.
  • ๐ŸŒ Net Exports (NX): Represents the value of a country's exports minus the value of its imports. Exports are goods and services produced domestically and sold abroad โœˆ๏ธ, while imports are goods and services produced abroad and purchased domestically ๐Ÿšข. If a country exports more than it imports, NX is positive; if it imports more than it exports, NX is negative. The formula is $NX = Exports - Imports$.
  • ๐Ÿงฎ GDP Formula: The formula is $GDP = C + I + G + NX$. Understanding each component helps you analyze economic activity and growth.

Practice Quiz

  1. Which of the following is included in the 'Consumption' component of GDP?
    1. A) A new factory being built.
    2. B) Government spending on road repairs.
    3. C) A family buying groceries.
    4. D) An increase in a company's inventory.
  2. Which of the following is included in the 'Investment' component of GDP?
    1. A) An individual purchasing shares of stock.
    2. B) A company buying new computers.
    3. C) Social Security payments.
    4. D) The purchase of foreign goods.
  3. Which of the following is included in the 'Government Purchases' component of GDP?
    1. A) Unemployment benefits.
    2. B) Government spending on national defense.
    3. C) An individual buying a new car.
    4. D) A company's unsold inventory.
  4. What does 'Net Exports' represent in the GDP formula?
    1. A) The total value of all goods and services produced in a country.
    2. B) The difference between a country's exports and imports.
    3. C) Government spending minus taxes.
    4. D) Consumer spending plus investment.
  5. If a country's exports are $500 billion and its imports are $600 billion, what is its Net Exports?
    1. A) $1100 billion
    2. B) $100 billion
    3. C) -$100 billion
    4. D) $0 billion
  6. Which of the following transactions is NOT included when calculating GDP?
    1. A) The purchase of a new house.
    2. B) The sale of a used car.
    3. C) A doctor's visit.
    4. D) A business buying office supplies.
  7. If Consumption = $2 trillion, Investment = $0.5 trillion, Government Purchases = $1 trillion, and Net Exports = -$0.2 trillion, what is the GDP?
    1. A) $3.7 trillion
    2. B) $3.3 trillion
    3. C) $2.7 trillion
    4. D) $2.3 trillion
Click to see Answers
  1. C
  2. B
  3. B
  4. B
  5. C
  6. B
  7. B

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