Question

In the economy of Wrexington in 2018, consumption was $6000, exports were $1000, GDP was $10,000, Government Purchases were $2000 and imports were $600. What was Wrexington's investment in 2018?

Answer 1

Wrexington's investment in 2018 was calculated by rearranging the GDP formula to solve for Investment (I), which turned out to be $1,600.

Step-by-step explanation:

To calculate Wrexington's investment for 2018, we should use the formula for Gross Domestic Product (GDP): Consumption (C) + Investment (I) + Government spending (G) + (Exports (X) – Imports (M)) = GDP. From the question, we have the following values: Consumption (C) = $6000, Exports (X) = $1000, GDP = $10,000, Government Purchases (G) = $2000, and Imports (M) = $600. To find Investment (I), we rearrange the formula: I = GDP – C – G – (X – M).

Plugging the numbers in: I = $10,000 – $6000 – $2000 – ($1000 – $600), which simplifies to: I = $10,000 – $6000 – $2000 – $400. Therefore, Wrexington's Investment in 2018 was: I = $1,600.