Question

Consider an economy where consumption equals $500, investment equals $900, government purchases equal $1000, imports equal $900 and exports equal $100. Calculate its GDP.

Answer 1

Answer:

C+I+G+(X-M)

500+900+1000+(100-1000)

=1500

Answer 2

Answer:

The GDP is 3200.

Explanation:

The GDP equals: Consumption + Investment + gOvernment purchases + Exports - Imports.

GDP = C + I + O + E - M

$500+900+1000+900-100 = 3200$