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MACROECONOMICS IN MODULES
5th Edition
ISBN: 9781319245368
Author: KRUGMAN
Publisher: MAC HIGHER
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Question
Chapter 7, Problem 1P
To determine
Concept introduction:
The formula to calculate the value of GDP is,
![MACROECONOMICS IN MODULES, Chapter 7, Problem 1P , additional homework tip 1](https://content.bartleby.com/tbms-images/9781319098759/Chapter-7/images/html_98759-7-1p_1.png)
Here,
- C is consumption spending.
- I is investment spending.
- G is government purchases.
- X is export.
- M is import.
Net Export: It is defined as the difference between the export and import value of a country.
The formula to calculate the value of net export is,
![MACROECONOMICS IN MODULES, Chapter 7, Problem 1P , additional homework tip 2](https://content.bartleby.com/tbms-images/9781319098759/Chapter-7/images/html_98759-7-1p_2.png)
Here,
- X is export.
- M is import.
- NX is net export.
Disposable income: It is defined as the amount of income left with a person when the tax paid is deducted from the private income and transfers.
The formula to calculate the value of disposable income is,
![MACROECONOMICS IN MODULES, Chapter 7, Problem 1P , additional homework tip 3](https://content.bartleby.com/tbms-images/9781319098759/Chapter-7/images/html_98759-7-1p_3.png)
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MACROECONOMICS IN MODULES
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