Question

"on 19 In the economy of Wrexington in 2008, consumption was $3000, exports were $400, GDP was $5000, imports were $600, and investment was $1100. What were red Wrexington's government purchases in 2008?

a $700
b. $500
c $300
d. $1100 "

Answer 1

Wrexington's government purchases in 2008 were $1100

Step-by-step explanation:

GDP of an economy is measured as:

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

Where C is consumption, I is investment, G government purchases and X are exports and M imports. So if we simplify for G we have

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

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

G= GDP -C - I - (X-M ) = 5000-3000-1100-(400-600)

Replacing values gives us:

G= 900-(-200) = 1100