Michigan Test for Teacher Certification (MTTC) Social Studies Practice Exam 2025 - Free MTTC Social Studies Practice Questions and Study Guide

Consumer spending is considered the component that contributes the largest percentage to the Gross Domestic Product (GDP) in the United States. This component encompasses all expenditures made by households on goods and services, including necessities like food and clothing as well as discretionary items such as entertainment and travel.

In fact, consumer spending typically accounts for around two-thirds of total GDP, reflecting the pivotal role that household consumption plays in driving economic activity. This level of expenditure indicates consumer confidence and the overall health of the economy, making it a critical focus for policymakers and economists.

The other components, while important, generally contribute less. Government spending focuses on federal, state, and local expenditures, while business spending includes investments in capital goods and infrastructure. Net exports, which measure the difference between a country's exports and imports, often show a negative balance in the U.S., thus contributing less to the overall GDP.