Question
Asked Jan 27, 2020
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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?

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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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