In a certain economy in 2005, households spent $1,000 on goods and services; purchases of capital equipment, inventories, and structures amounted to $350; government spent $450 on goods and services; and the value of imports exceeded the value of exports by $50. It follows that 2005 GDP for this economy was a $2,100. b $1,850. c $1,950. d $1,750.

Question

Nathan Harvey

Business

19 April, 16:30

In a certain economy in 2005, households spent $1,000 on goods and services; purchases of capital equipment, inventories, and structures amounted to $350; government spent $450 on goods and services; and the value of imports exceeded the value of exports by $50. It follows that 2005 GDP for this economy was a $2,100. b $1,850. c $1,950. d $1,750.

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Matthew Boyer · Answer 1

d $1,750

Explanation:

The computation of the GDP is shown below:

= Household expense + purchase cost of capital equipment, inventories, and structures + government spending - net exports

= $1,000 + $350 + $450 - $50

= $1,750

Since the value of imports exceeded the value of exports that means imports value is exceeded then the exports value and the net exports equal to

= Exports - imports

= - $50