nment Score: 20% n Expand Resources Check Answ Question 4 of 5 Suppose that GDP

Question

nment Score: 20% n Expand Resources Check Answ Question 4 of 5 Suppose that GDP is $50 million in 2015 but falls to $48 million in 2016, and that no changes in personal consumption expenditures, gross private domestic investment, and government spending are exports to cause this change? recorded. What must have happened to net O From 2015 to 2016, the difference between exports and imports must have fallen by $2 million. OFrom 201 15 to 2016, the difference between exports and imports must have risen by $2 million. From 2015 to 2016, both imports and exports must have fallen by $2 million. From 2015 to 2016, both imports and exports must have risen by $2 million. MacBook 5 8

Explanation / Answer

answer:

we know,

GDP or output = C+I+G+NX

where, C= consumption expenditure ; G= gov. expenditure, I = investment ;

NX = net exports = exports - imports

here, since C , G, I have not changed and GDP has fallen then this could only happen if net exports fall by $2 million.

thus option a is correct i.e. from 2015 to 2016 net exports which is nothing but differnce between exports and imports has fallen by $2 million

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