Question

Country 1 has a gross domestic product (GDP) of $75 billion. The country has a large public sector, which accounts for $25 billion of spending. Consumer spending and investment spending account for $25 billion and $15 billion respectively. What are the values of Country 1’s imports and exports?

Answer 1

Answer: $ 10 billion

Explanation: The equation needed to find the values of export and import is given by :

Y = C + I + G + (X - M)

Where;

Y -GDP

C - consumption

I - investment

G - government spending/ public sector spending

X - exports

M - imports

The following values are given from the question:

Y - $75 billion

C - $ 25 billion

I - $ 15 billion

G - $ 25 billion

X - ?

M - ?

75 = 25 + 15 + 25 + (X-M)

Making (X-M) the subject of the formula

(X-M) = 75 - 25 - 25 - 15

= 10 billion

The value of exports and imports is $ 10 billion