- Since GDP describes the total value of all goods and services in an economy, then consumer consumption is a major source of GDP fluctuations. This is because the more people buy, the more needs to be produced in order to meet demand; the less they buy, the less needs to be produced. A high GDP partly reflects citizens able to buy more than just their bare necessities and can moving on to things such as computers, high-end clothing and portable music players. The converse is also true.
- Changes in the investment level also affect the level of GDP. Investment, it is important to note in this case, does not describe purchasing stocks, bonds and other forms of investment that only exist on paper. It describes investment in businesses, such as a set of computers for an office, new equipment for a coal mine or a new fleet of trucks for a moving company. So, while the money spent on a stock or bond isn't included as part of GDP, it is included when it is invested by the company that issued the stock or bond.
Investors are reluctant to put their money in long-term projects if they don't have faith in the economy; it is not wise to build a high-rise, for example, if there aren't going to be people to fill it when it is finished. So, investment rates will rise and positively affect GDP during good times, and the converse will happen during poorer times. - If the people in an economy borrow money from external sources, the economy's GDP rises, and if they lend money overseas, the economy's GDP falls. This highlights one of the weaknesses of GDP. If people in an economy borrow money from outside that economy, then spend it on consumer goods, then the GDP looks inflated. Conversely, if people lend money outside their economy, the GDP looks like it is falling because fewer goods are being consumed. It's like looking at the contents of someone's wallet without looking at their bank account.
- Trading with other economies also alters GDP. If an economy imports more than it exports, then it will have a lower GDP, because while goods are being consumed they are not being produced. Conversely, if an economy exports more than it imports it will have a higher GDP because it will be producing more goods than its people are capable of consuming. So, changes to the structure of trade can result in fluctuations in GDP.