Question

The following are national income account data for a hypothetical economy in billions of dollars: gross private domestic investment ($320), imports ($35), exports ($22), personal consumption expenditures ($2,460), and government purchases ($470). What is GDP in this economy?
A) $3,250 billionB) $3,263 billionC) $3,237 billionD) $3,290 billion

Answer 1

Answer:

C

Explanation:

GDP (Gross-domestic-product) is the total market value or monetary value of all goods and services produced in a country during an specific period of time (normally: 1 year). There are three methods by which GDP can be calculated: by expenditure , by income and by production. Acoording to the information given by the problem we should use the expenditure formula:

GDP= C+I+G+NX

C=Consumption

I= Investment

G= Governmet expenditures

NX= Net exports (Exports-Imports)

In this case:

GDP= $2,460+$320+$470+($22-$35)= $3,327 billion