Question

Suppose GDP in an economy is $3,542 billion. Personal Consumption Expenditures (C) are $2,343 billion, Government Spending (G) is $865 billion, and Gross Private Domestic Investment (I) is $379 billion. Net foreign factor income (NFFI) is $ 10 billion. What are net exports (NX)? That is, what is the numerical value of net exports? If the answer is a positive number, you don't need to write + before the number. If the answer is a negative number, then make sure you write a - (minus) sign before the number.

Answer 1

Answer: -$45 billion.

Explanation:

Net Exports refers to Exports out of a country less imports into the country and it is a component of GDP using the Expenditure method. The other components include Government Spending, Investment and Consumption all of which are given in the above question.

The Net Exports are therefore;

GDP = Consumption + Investment + Government Spending + Net Exports

3,542 = 2,343 + 865 + 379 + Net Exports

3,542 = 3,587 + Net Exports

Net Exports = 3,542 - 3,587

Net Exports = -$45 billion

The Net Exports are negative which means that more goods were imported than were exported.