Question

Calculate consumer spending given the following information:

GDP = $96 million

Government spending = $19 million

Financial investment spending = $12 million

Investment spending = $18 million

Net exports = $2 million

Answer 1

AE or GDP = C + I + G + (X-M)
Use this formula, try it out.

Answer 2

The consumer spending is $57 million.

Explanation:

Given information: GDP = $96 million, Government spending = $19 million, Financial investment spending = $12 million, Investment spending = $18 million, Net exports = $2 million.

The formula for gross domestic product (GDP ) is

`GDP=C+I+G+NX`

where, C is consumption, I is Investment, G is government + NX is net Exports.

Substitute GDP=96, I=18, G=19 and NX=2 in the above formula.

`96=C+18+19+2`

`96=C+39`

Subtract 39 from both the sides.

`96-39=C+39-39`

`57=C`

Therefore the consumer spending is $57 million.