Components of GDP: 

There are four major components of GDP(Y), namely household consumption (C) and investment (I), government spending (G) and net exports (NX). Their relationship can be expressed as an identity:

                        Y= C+I+G+NX

The consumption of goods and services(C) includes:

Durable Goods - The consumption of durable goods is considered similar to a consumer investment. Durable goods are purchased with the intention of keeping them for a sustained duration of time. Examples of durable consumer purchases include washing machines, refrigerators, automobiles, and toaster ovens.

Nondurable Goods - In contrast to durable goods, nondurable items have a shorter life span. An example of a nondurable consumer purchase is groceries. The life span of the typical food is short, especially compared with the refrigerator (durable item) in which perishable foods are kept. Other examples of purchases that are considered nondurables include newspapers, magazines, clothing, and hats (which are always flying off with the wind).

Services - Since the 1960s the fastest growing component of consumer purchases has been the area of services. Services include medical treatment, lawyers, and dry cleaners.

Investment (I) refers to investment activity that businesses and corporations undertake which involves the purchase of goods to support in the production process.

Government spending (G) - The government tracks what the government actually spends money on. Government purchases of goods and services include military equipment, government-funded research, space shuttles, public works etc. Most of these items are hardly ever sold in markets; as a result, they are valued at the price the government pays for them. The calculation of government spending for GDP purposes excludes several tremendous categories of actual spending such as transfer payments, which redistribute income primarily to individuals who are potential consumers, and interest payments on the debt.

Net exports (NX) refer to exports less imports. Net exports are basically the difference between exports and imports.