Q. Household Consumption Expenditure (HCE) is an important component of Gross Domestic Product (GDP) calculation because:

[A] It reflects the level of investment in infrastructure by households.

[B] It records government expenditure on public goods and services.

[C] It represents the demand for goods and services generated by households.

[D] It measures the savings of households contributing to national wealth.

Answer: C
Notes:

Explanation – Household Consumption Expenditure (HCE), also referred to as Private Final Consumption Expenditure (PFCE), is a critical component of GDP calculation because it reflects the total spending by households on goods and services to meet their needs and wants. This expenditure accounts for a significant portion of GDP, often around 60-70%, and serves as a key indicator of domestic demand within an economy.

Source: The Hindu

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