suppose that the sum of consumption, investment, and government spending is $620

Question

suppose that the sum of consumption, investment, and government spending is $620 billion, where investment includes involuntary accumulation of $2 billion in addtion to expenditure on plant and equipment, and governement spending includes $5 billion interest payment on the national debt, $5 billion unemployment insurance payments, $10 billion socail security payment, $2 billionin salaries to elected politicians, $14 billion in salaries to government employees, and $25 billion expenditure on goods and services produced by the private sector. If we imported $3 billion more than we exported, what is the measured GDP?

Explanation / Answer

private consumption+gross investment+gross spending =620-(2+5+5+10+2+14+25) =620-63 =557 billion exports-imports = -3 hence GDP=private consumption+gross investment+gross spending+exports-imports =557-3 =554 billion

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