Question

Which factor in the calculation of GDP would cause economic growth?

Answer 1

Answer:

B. decrease in imports

Explanation:

The formula to calculate GDP is: GDP = C + G + I + X - M

In that, C stands for consumer spending, G stands for government spending, I stands for investment, X stands for exports and M stands for imports.

As indicated in the formula, consumer spending, government spending, investment and exports are directly proportional with GDP. So that when there is a decrease in these factors it would result in a decrease in GDP as well.

Oppositely, import is inversely proportional with GDP, thus a decrease in import will lead to the increase in GDP, causing the economic growth.