Problem ts economy relies heavily on tourism. The maájority of the hotels and re

Question

Problem ts economy relies heavily on tourism. The maájority of the hotels and resorts in Lewis are owned by foreign countries. Which do you think is larger, Lewis GDP or GNP? Explain wh Problem 3 Table 1: Components of Expenditure in the US. (hypothetical values). All frigures are in billions of dollars. Durable goods Nondurable goods Services Business investment Residential investment Change in business inventories Federal spending State spending Exports Imports 659.3 1592 3234.5 846.9 327.2 68.4 523.8 928.9 957.1 1058.1 1/2 a. Based on Table I, calculate the U.S. Consumption, Investment, Government Purchases, and Net Exports. (Show your work.) b. What is the U.S. GDP? (Show your work.)

Explanation / Answer

Consumption expenditure=expenditure on consumer goods(durable,semi durables,non durables and non material goods)

Consumption expenditure=659.3+1592+3234.5=5,485.5

Investment=Business investment+residential investment(investment in housing)+change in inventory(end stock-opening stock)

Investment=846.9+327.2+68.4

Investment=1242.5

Government purchases=federal spending+state spending

Government purchases=523.8+928.9=1452.7

Net exports=exports-imports

Net exports=957.1-1058.1=-101

B.GDP=Consumption+investment+government purchases+net exports

GDP=5485.8+1242.5+1452.7-101=8080.

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