Question

Suppose that for the economy of​ Utopia, we have the following information for​ 2018: consumption expenditures​ = $5,000; wages​ = $3,500; gross private domestic investment​ = $1,200; government expenditures​ = $2,000; exports​ = $900; imports​ = $1,100. Using the expenditure approach what would the Gross Domestic Product​ (GDP) be for Utopia in​ 2018?

Answer 1

Answer:

$8,000

Explanation:

Consumption expenditures​ = $5,000

Wages​ = $3,500

Gross private domestic investment​ = $1,200

Government expenditures​ = $2,000

Exports​ = $900

Imports​ = $1,100

Through expenditure approach,

GDP = consumption (C) + investment (I) + government spending (G) + net exports (X – M)

= $5,000 + $1,200 + $2,000 +  ($900 - $1,100)

= $8,200 - $200

= $8,000