Asked Jan 27, 2020

What is the level of private consumption in GDP is 10,000, investment is 2,900, government spending is 1,600, imports are 3,100, and exports are 3,500?


Expert Answer

Step 1

The GDP is the value of all the final goods and services that are produced in an economy in a given period of time. It is the sum of consumption expenditure, investment expenditure, government expenditure and the net exports.

It can be written as:

Y = C + I + G + NX

Where, C is the consumption expenditure, I represent the investment expenditure, G is the government expenditure and NX represents the net exports (which is the difference between exports and imports).

Step 2

Putting the values:

Y = C + I + G + (X – M)

10,000 = C + 2,900 + 1,600 + (3,500 – 3,100)

10,000 = C + 4,9...

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