Answer:
The amount spent in this economy in the said quarter is<em> $100,000,000.00</em>
Explanation:
<em>However, in closed economies what it simply means is that there are no exports and imports.</em>
<em />
Investment (I) = business investment plus residential investment plus inventory investment. Government Purchases (G) = general government consumption plus general government investment. Net Exports (NE) = exports minus imports plus net tourism.
∴ to calculate the amount of money spent on this closed economy, I will use the <em>Expenditure Approach formula</em> for GDP and make Investment the subject of the formula which is
GDP formula is used which states that total output/GDP (Y) is equal to Consumption (C) + Investment (I) + Government Spending (G) + Net exports (NX). Where net exports is exports (X) minus imports (M): NX = X – M.
Where:
GDP (Y) = C + I + G + (X-M)
Where:
GDP (Y) = $400,000,000.00
C = $150,000,000.00
I = 0
G = $150,000,000.00
(X-M) = 0
GDP (Y) = C + I + G + (X-M) =
$400,000,000.00 = $150,000,000.00 + (I) + 150,000,000.00 + (X-M)
Making (I) the subject of the Formula
GDP- C -G = I
∴ $400,000,000.00 - $150,000,000.00 - $150,000,000.00 = I
∴ $400,000,000.00 - $300,000,000.00
=<em> $100,000,000.00</em>
<em></em>
The amount spent in this economy in the said quarter
=<em> $100,000,000.00.</em>
<em></em>
<em>Note: </em><em>I did not add the Tax because I used the Expenditure approach method which does not include the tax values while the Income Approach method does include it but excludes Export and Import values.</em>
