National Income Accounts (dollar figures are in billions)
Expenditures for consumer goods and services $2,850
Exports $300
Government purchases of goods and services $810
Social Security taxes $295
Net investment $510
Indirect business taxes $445
Imports $450
Gross investment $700
Corporate income taxes $190
Personal income taxes $875
Corporate retained earnings $210
Net foreign factor income $0
Government transfer payments to households $780
Net interest payments to households $20
On the basis of Table 5.2, GDP is:_______.
A) $2,090 billion.
B) $4,210 billion.
C) $4,400 billion.
D) $4,020 billion.

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sebastiansierraocm sebastiansierraocm · Answer 1 · 2020-06-24T03:40:49+02:00

Answer:

B) $4,210 billion.

Explanation:

We will use the expenditure approach to calculate GDP. The formula is:

GDP = Consumption + Investment + Government Spending + Net Exports (Exports - Imports)

Now we take from the question the relevant information:

Consumption

Expenditures for consumer goods and services $2,850

Investment

Gross investment $700

Government Spending

Government purchases of goods and services $810

Net Exports

Exports $300

Imports $450

Net Exports: ($150)

Now, we plug these amounts into the formula:

GDP = $2,850 + $700 + $810 + ($150)

GDP = $4,240 Billion