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Principles of Economics 2e

2nd Edition
Steven A. Greenlaw; David Shapiro
ISBN: 9781947172364

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Principles of Economics 2e

2nd Edition
Steven A. Greenlaw; David Shapiro
ISBN: 9781947172364
Textbook Problem

Country A has export sales of Chapter 19, Problem 1SCQ, Country A has export sales of billion, government purchases of billion, business investment is , example  1 billion, government purchases of Chapter 19, Problem 1SCQ, Country A has export sales of billion, government purchases of billion, business investment is , example  2 billion, business investment is Chapter 19, Problem 1SCQ, Country A has export sales of billion, government purchases of billion, business investment is , example  3 billion, imports are Chapter 19, Problem 1SCQ, Country A has export sales of billion, government purchases of billion, business investment is , example  4 billion, and consumption spending is Chapter 19, Problem 1SCQ, Country A has export sales of billion, government purchases of billion, business investment is , example  5 billion. What is the dollar value of GDP?

To determine

The Gross Domestic Product (GDP) of country A.

Answer

GDP= $3030 bn.

Explanation

Given Information:

Given values in the question are

C= $2,000 bn

I = $50 bn

G= $ 1,000 bn

X= $20 bn

M= $40 bn

Calculation:

So, substituting these values in the equation for GDP, we get,

GDP=$2000+$50+$1,000+($20$40)=$2,000+$50+$1,000$20=$3,030billion

Hence, The Gross Domestic Product (GDP) of country A is $3030 bn.

Concept

Gross Domestic Product of a country: GDP of a country is the market value of all finished (final) goods and services produced in an economy during a particular year. It represents the economic well-being of a country as it is the aggregate income of that economy.

To define in terms of demand, GDP is the aggregate of all the expenditure by all economic units in an economy, namely, government purchases, private consumption expenditure, investment expenditure, expenditure on net exports(exports-imports), etc. The equation below defines GDP as the aggregate expenditure in the economy:

GDP = C + I + G + (X-M)

Where,

C = Consumption Expenditure

I= Business Investment Expenditure

G = Government Purchases

X = Exports

M= Imports

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