What are the four major components of GDP?

The four major components of Gross Domestic Product (GDP) are accurately represented by consumption, investment, government spending, and net exports. Consumption refers to the total value of all goods and services consumed by households. Investment includes business investments in equipment and structures and residential construction. Government spending encompasses government expenditures on goods and services that contribute to the economy. Net exports represent the difference between the value of a country's exports and imports, reflecting how trade interacts with domestic production.

This framework provides a comprehensive approach to understanding economic activity since it encapsulates both internal and external exchanges within the economy. Other potential combinations may miss key aspects of economic contribution, such as the importance of exports in relation to imports, thereby impacting the overall GDP calculation.