Question

Complete the table to calculate GDP using the expenditure approach. (Billions of dollars)

Consumption (C): 13,321.4
Investment (I): 3,368.0
Exports (X): 2,350.2
Imports (M): 2,928.6
Net Exports of Goods and Services: ?
Government Purchases (G): 3,374.4
Gross Domestic Product (GDP): ?
a) 415.0; 19,034.0
b) 453.8; 19,345.4
c) 577.4; 20,352.6
d) 299.6; 17,621.8

Answer 1

To calculate GDP using the expenditure approach, add up consumption spending, investment, government spending, and net exports of goods and services. The correct values for net exports of goods and services and GDP are 577.4 billion dollars and 20,352.6 billion dollars respectively.

Thus, the correct answer is option c.

Step-by-step explanation:

Gross Domestic Product (GDP) can be calculated using the expenditure approach, which is represented by the formula: Consumption + Investment + Government spending + (Exports – Imports). The given values for Consumption (C), Investment (I), Exports (X), and Imports (M) are provided in the question. To calculate Net Exports of Goods and Services, we subtract Imports (M) from Exports (X). Adding up all the values, we get:

Net Exports of Goods and Services: X - M = 2,350.2 - 2,928.6 = -578.4

Next, we substitute the values into the GDP equation:

GDP = C + I + G + (X - M) = 13,321.4 + 3,368.0 + 3,374.4 + (-578.4) = 19,485.4

Therefore, the correct answer is option c) 577.4; 20,352.6.