What's it: Consumer spending patterns are changes over time in the total money individuals spend on goods and services for personal use. It also refers to the relative proportion of what an individual consumes. Comparisons may be based on time
How Do Economists Measure Economic Activity?
Economists measure economic activity using several approaches, namely income, expenditure, and output. All three will produce an equal number. How do all three approaches produce an equal number? Economists use circular flow diagrams (also known
Government Expenditure: Components and Effects on the Economy
What's it: Government expenditure refers to the money the government spends on goods and services or other items. Examples are expenditures on operational activities and investments in public services such as defense, education, social
Exports: Importance, Types, Influencing Factors
What's it: Export means sending domestic goods and services to foreign markets for sale. As compensation, we get foreign currency as payment, say US dollars. Thus, exports do not only have implications for the demand for domestic output. But, it
How to avoid double counting in calculating GDP?
Double counting can cause miscalculations in the gross domestic product (GDP). This error will overstate the GDP number because it counts the same item more than once. To avoid these mistakes, we can use a value-added approach. How can double
Autonomous Expenditure: Formula, Components, Determinants
What's it: Autonomous expenditure is unaffected by income level. In other words, they will still exist even if the income equals zero. Spending on items such as food and drink is an example. They are essential for meeting our basic needs. So, we
Gross Domestic Product (GDP): Three Approaches, Importance, How to Calculate
Gross Domestic Product (GDP) is the total market value of all final goods and services produced in the domestic economy during a certain period. Alternatively, we can also define GDP as the total expenditure or total income in the