Pedro is a Keynesian economist and argues that in a downturn, state intervention is the key for economic recovery.
Keynesians believe that GDP (Gross Domestic Product) is positively influenced by aggregate demand. Hence, in order to boost GDP growth after a downturn, the state should step in the economy by increasing public expenditure. This will help to create job positions, increase the disposable income of households and therefore increase overall demand for goods and services.
If more goods and services are demanded, the same cycle restarts as firms would hire more staff in order to increase production to a greater extent to meet the new necesities. The more people who is employed, the more income avilable to continue increasing private expenditure and investments, which in turn GDP and bring economic growth.
<em><u>To make it clearer, the following is the GDP formula for a certain time period</u></em>
<em>GDP = Private Consumption + Private investment + Public expenditure + Exports - Imports </em>
Correct answer:
2. The totals the monetary value of all the finished goods and services produced in a country in a given period
Explanation:
GDP is abbreviated as Gross Domestic Product. It is the broadest quantitative live of a nation's total economic activity. A lot of specific, GDP represents the price of all product and services created among a nation's geographic borders over a specific amount of your time.
<span>It is calculated as:
</span>GDP<span> = private consumption + gross investment + government investment + government spending + (exports – imports)</span>
<span>A social cost would be the lack of a venue for a sporting team that would bring the community together and provide revenue. A social benefit would be the preserving of a natural space that can be shared and enjoyed by all for many uses.</span>
