Question

Please calculate GDP using the following information: Government purchases - $200 billion Depreciation - $60 billion Investment - $80 billion Consumption - $600 billion Exports - $100 billion Imports - $120 billion Income receipts from the rest of the world - $10 billion Income payments to the rest of the world - $8 billion

Answer 1

The GDP is $860 billion.

Step-by-step explanation:

The gross domestic product (GDP) can be calculated using the expenditure approach formula as follows:

Y = C + I + G + (X - M) ....................................... (1)

Where:

Y = GDP = ?

C = Consumption = $600 billion

I = Investment - $80 billion

G = Government purchases = $200 billion

X = Exports = $100 billion

M = Imports = $120 billion

Substituting the values into equation (1), we have:

Y = $600 + $80 + $200 + ($100 - $120) = $860 billion

Therefore, the GDP is $860 billion.