Question

Consider the information about the economy of Pakistan. Note that the currency of Pakistan is the rupee.

The government purchases: 2.60 trillions of rupees.
Individuals consume: 11.50 trillions of rupees.
Individuals save: 5.54 trillions of rupees.
Businesses invest: 1.35 trillions of rupees.
Foreigners spend: 0.57 trillions of rupees to purchase Pakistani firms.
Pakistan imports: 2.00 trillions of rupees.
Pakistan exports: 1.24 trillions of rupees.

Calculate Pakistan's GDP. Assume that the values are all current and no conversions need to be made. Give your answer in terms of trillions of rupees, and round to two decimals.

Pakistan's GDP: ___________________ trillions of rupees

Answer 1

Pakistan's GDP = 14.69 trillions of rupees

Step-by-step explanation:

Gross domestic product is the total value of all final goods and services produced in a country. In this question, savings and foreign purchases of businesses were distractors. Since GDP is a measure of the production of an economy, you only include final goods and services. While savings and foreign investment are important to any economy, they are not final goods and services.

Pakistan's GDP = Individual consumption + Businesses invest + Government purchases + Net exports

Pakistan's GDP = 11.50 + 1.35 + 2.60 + (1.24 - 2.00)

Pakistan's GDP = 11.50 + 1.35 + 2.60 - 0.76

Pakistan's GDP = 14.69 trillions of rupees