Question-6: What is a Capex?

Answer: Capital expenditures, such as on plant, equipment, and software license by a firm are part of this. These expenditures, add to the economy’s potential GDP as well as to actual, because they enhance each worker’s ability to produce output. Hence, we can say that Capex is good for GDP because it improves the country’s productivity.

Question-7: Is this correct to say that pile of inventories because of any reason increases the GDP.

Answer: Not for all the cases but couple of example below would helps in GDP

• Due to disappointing sales
• Intended stock accumulation

Increases GDP, because goods are produced and available in inventory.

Question-8: What is the effect of import on a countries GDP?

Answer: Anything of the spending that is purchased from other countries which is considered as an, imports would results in a reduction in aggregate demand, hence reduces GDP. Any purchases by other countries e.g. export add to aggregate demand and adds to GDP.

Question-9: What do you mean by trade deficit?

Answer:  This represent a countries’ difference between imports and exports, if import is higher than the overall export by a country.

Question-10: How do you relate GDP with the demand?

Answer: An increase in demand from any of the sectors, which require production of goods and service which results in GDP increases. Because firm would producers more and to produce more it has to use more materials, and need to purchasing them from other firms, which in turn this firm would produce more. To produce more firms also usually hire more labor, and labor spend their earnings. So, A positivity in the market and in the country’s economy. If potential resources are more utilized it would result in reducing the GDP gap (potential GDP vs actual GDP).