Question

In an open economy, GDP is $12 trillion this year. Consumption is $8 trillion, and government spending is $2 trillion. Taxes are $0.5 trillion. Exports are $1 trillion, and imports are $3 trillion. How much is investment spending? $3 trillion $2 trillion $4 trillion $3.5 trillion

Answer 1

$4 trillion

Step-by-step explanation:

Gross domestic product is the sum of all final goods and services produced in an economy within a given period which is usually a year.

GDP in an open economy is calculated using this formula:

Consumption spending + Investment spending + Government Spending + Net Export

Net Export = export - import

$1 trillion - $3 trillion = $-2 trillion

$12 trillion = $8 trillion + Investment spending + $2 trillion - $2 trillion

Investment spending = $12 trillion - $8 trillion = $4 trillion

I hope my answer helps you