Question

In the expenditure equation, what does \(C\) represent?

Options

• Change in Inventories

• Consumption of Fixed Capital

• Government Final Consumption and Investment Expenditure

• Private Final Consumption Expenditure

Answer 1

In \(GDP_{MP}=C+I+G+(X-M)\), \(C\) stands for Private Final Consumption Expenditure. It is expenditure by households and private institutions on goods and services.