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Anni [7]
3 years ago
14

Suppose that Inventories fall by $2 billion, Consumption increases by $8 billion, Welfare Payments decline by $3 billion, Export

increases by $1 billion and Import also increases by $2 billion. Ceteris paribus! By how much should measured-GDP change?
Business
1 answer:
Georgia [21]3 years ago
8 0

Answer: <u><em> The measured-GDP would increase by $5 billion.</em></u>

Explanation:

Given :

Inventories fall by $2 billion,

Consumption increases by $8 billion,

Welfare Payments decline by $3 billion,

Export increases by $1 billion

Import also increases by $2 billion.

Note: While calculating GDP we will not include Welfare payments in it.

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

GDP = -2 + 8 + 1 - 2

GDP = $5 billion  

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