The components that comprise a nation’s gross domestic product were identified a

Question

The components that comprise a nation’s gross domestic product were identified and discussed in the chapter. Assume the following accounts and amounts were reported by a nation last year. Government purchases of goods and services were $5.5 billion; personal consumption expenditures were $40.5 billion; gross private domestic investment amounted to $20 billion; capital consumption allowances were $4 billion; personal savings were estimated at $2 billion; imports of goods and services amounted to $6.5 billion; and the exports of goods and services were $5 billion.

a. Determine the nation’s gross domestic product.
b. How would your answer change if the dollar amounts of imports and exports are reversed?

Explanation / Answer

GDP= PCE + GE + GPDI + NE

Where GDP = gross domestic product; PCE = personal consumption expenditures,
GE = government expenditures, GPDI = gross private domestic investment, and NE =
net exports of goods and services.

So 40.5+5.5+20+(5-6.5)=64.5Billion

if they were reversed:
40.5+5.5+20+(6.5-5)=67.5Billion

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.