Chapter7: Macroeconomic Measurements, Part Ii: Gdp And Real Gdp
Section: Chapter Questions
Problem 1WNG
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- Why do we subtract import spending from total expenditures while calculating the
GDP ?
Expert Solution
Step 1
Imports are the goods and services that are bought from the rest of the countries to our country. The expenditure is on foreign goods and services. Hence, they cannot be included in the foreign income and subtracted from the national income.
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