Question

GDP data (billions of dollars)

Indirect business taxes $600
Depreciation 950
Change in business inventories 50
Compensation of employees 5,400
Corporate profits 700
Durable goods 600
Exports 100
Social Security taxes 360
Transfer payments 300
Fixed investment 950
Government spending 800
Imports 150
Net interest 500
Nondurable goods 2,000
Personal taxes 1,000
Rental income 200
Services 4,000
Using the expenditures approach, compute net exports (X-M). Which of the following is correct?
a. $5,178 billion.
b. $6,450 billion.
c. $5,740 billion.
d. $7,740 billion.
e. $8,350 billion.

Answer 1

To calculate net exports (X-M), take the value of exports ($100 billion) and subtract the value of imports ($150 billion), which results in net exports of -$50 billion, indicating a trade deficit.

Step-by-step explanation:

The student has asked to compute net exports (X-M) using the provided GDP data. To calculate net exports, we take the value of exports and subtract the value of imports. According to the data provided, we have exports of $100 billion and imports of $150 billion.

Net exports (X-M) = Exports (X) - Imports (M)
Net exports (X-M) = $100 billion - $150 billion
Net exports (X-M) = -$50 billion.

Therefore, the correct computation of net exports is -$50 billion, which indicates that this economy has a trade deficit, as it is importing more than it is exporting.

Answer 2

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