Question

The following are national income account data for a hypothetical economy in billions of dollars: government purchases ($1,050); personal consumption expenditures ($4,800); imports ($370); exports ($240); gross private domestic investment ($1,130). Personal consumption expenditures are approximately what percentage of this economy?

Answer 1

Answer:

Percentage of Personal consumption expenditures is 70.07%

Explanation:

The most common way to measure the national income account is gross domestic product (GDP)

GDP = C + I + G + (X – M) or

GDP = private consumption + gross investment + government investment + government spending + (exports – imports).

government purchases ($1,050) is government spending

personal consumption expenditures ($4,800) is private consumption

imports ($370)

exports ($240)

gross private domestic investment ($1,130) is gross investment

GDP = $1,050 +$4,800+$1,130+$240-$370=6.850

Personal consumption expenditures proportion  is $4,800/6.850=0,7007

in %= 70.07%