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Economics (MindTap Course List)

13th Edition
Roger A. Arnold
ISBN: 9781337617383

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BuyFindarrow_forward

Economics (MindTap Course List)

13th Edition
Roger A. Arnold
ISBN: 9781337617383
Textbook Problem

Will GDP be smaller than the sum of consumption, investment, and government purchases if net exports are negative? Explain your answer.

To determine

Explain the GDP if net export is negative.

Explanation

Gross Domestic Product (GDP) can be calculated by adding of consumption, expenditure, investment, government purchases and net exports. In this case, if net exports is negative, then the GDP might be smaller than the sum of consumption, investment and government purchases. Let’s explain this by using the following example.

If

Investment is $60

Government purchases is $50

Consumption is $180

Export is $0

Import $80...

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