If exports are $500, GDP is $8000, government purchases are $1200, imports are $700, and investment is $800, then consumption is $6200. a. TRUE b. FALSE

Question

Cade Irwin

Business

15 May, 16:34

If exports are $500, GDP is $8000, government purchases are $1200, imports are $700, and investment is $800, then consumption is $6200. a. TRUE b. FALSE

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Answers (1)

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Anabella Terrell · Answer 1

True

Explanation:

The GDP formula is:

GDP = Consumption (C) + Investment (I) + Government expenditure (G) + Net exports (exports-imports)

The problem is givind the following information:

GDP=$8000

I=$800

G=$1200

Ex = $500

Im=$700

We transform the formula to get C in terms of GDP, I, G and NX:

C=GDP-I-G-NX

C=$8000-$800-$1200 - ($500-$700)

C=$6200