Using the following information calculate the GDP for this economy:

Consumption of $5 000
Investment of $10 000
Government purchases of $3 000
Government transfer payments of $1 000
Exports of $6 000
Imports of $5 000

Question

Using the following information calculate the GDP for this economy:

Consumption of $5 000
Investment of $10 000
Government purchases of $3 000
Government transfer payments of $1 000
Exports of $6 000
Imports of $5 000

BlackTom AI · Accepted Answer

To compute GDP, we use the expenditure approach: GDP = C + I + G + NX, where NX stands for net exports (exports minus imports).

First, note that government transfer payments are not part of GDP; they are transfers and do not represent current production.

Next, calculate net exports: Exports (X) = 6,000 and Imports (M) = 5,000, so NX = X - M = 6,000 - 5,000 = 1,000.

Now add the components of domestic production: Consumption (C) = 5,000, Investment (I) = 10,000, Government purchases (G) = 3,000, and Net exports (NX) = 1,000.

Sum them up: 5,000 + 10,000 + 3,000 + 1,000 = 19,000.

Therefore, the GDP figure derived from these data reflects the value of all final goods and services produced domestically, excluding transfers, by aggregating consumption, investment, government spending, and net exports.

BECO011 2025 Sample Final Exam for Practice

Using the following information calculate the GDP for this economy: Consumption of $5 000 Investment of $10 000 Government purchases of $3 000 Government transfer payments of $1 000 Exports of $6 000 Imports of $5 000

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