Question:
What is GDP and how is it calculated?
Answer:
GDP, or Gross Domestic Product, is a key measure of a country's economic activity. It represents the total value of all goods and services produced within a country's borders over a specified period. GDP is calculated using either the expenditure approach, income approach, or production approach. The expenditure approach sums up the total spending on final goods and services, including consumption, investment, government spending, and net exports. The income approach calculates GDP by summing up all income earned by individuals and businesses, including wages, profits, rents, and interest. The production approach adds up the value added at each stage of production across all industries. By measuring GDP, economists can analyze economic growth, living standards, and the overall health of an economy.
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Question:
The following table provides information on the components of GDP for a hypothetical economy in a given year:
Consumption expenditure: $800 billion Investment expenditure: $200 billion
Government expenditure: $300 billion Exports: $150 billion Imports: $100 billion
Calculate the GDP for the economy.
Answer:
To calculate the GDP, we need to sum up the four components: consumption expenditure, investment expenditure, government expenditure, and net exports (exports minus imports).
GDP = Consumption expenditure + Investment expenditure + Government expenditure + Net exports GDP = $800 billion + $200 billion + $300 billion + ($150 billion - $100 billion) GDP = $800 billion + $200 billion + $300 billion + $50 billion GDP = $1,350 billion
Therefore, the GDP for the economy is $1,350 billion.
Question:
Suppose an economy has a GDP of $500 billion and government expenditure of $100 billion. If the consumption expenditure is $350 billion, what is the value of investment expenditure?
Answer:
To find the value of investment expenditure, we need to subtract consumption expenditure and government expenditure from the GDP.
Investment expenditure = GDP - Consumption expenditureGovernment expenditure
Investment expenditure = $500 billion$350 billion - $100 billion
Investment expenditure = $50 billion
Therefore, the value of investment expenditure is $50 billion. https://www.economicshomeworkhelper.com/
Question:
An economy has a GDP of $800 billion. If the consumption expenditure is $500 billion and investment expenditure is $150 billion, calculate the value of net exports (exports minus imports) if government expenditure is $200 billion.
Answer:
To find the value of net exports, we need to subtract consumption expenditure, investment expenditure, and government expenditure from the GDP.
Net exports = GDP - Consumption expenditure - Investment expenditure - Government expenditure
Net exports = $800 billion - $500 billion - $150 billion - $200 billion
Net exports =$50 billion
Since the value is negative, it indicates that the economy has a trade deficit, meaning that imports exceed exports by $50 billion.
Therefore, the value of net exports is -$50 billion.
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