a. Determine the nation \' s gross domestic (GDP) for next year. b. How would yo

Question

a. Determine the nation ' s gross domestic (GDP) for next year. b. How would your answer change in (a) if personal consumption expenditures are only $35 billion next year and capital consumption allowances actually increase by 10 percent? 7. A nation's gross domestic product (GDP) is $600 million. Its personal consumption expenditures are $350 million, and government expenditures are $100 million. Net exports of goods and services amount to $50 million. a. Determine the nation's gross private domestic investment. b. If imports exceed exports by $25 million, how would your answer to (a) change?

Explanation / Answer

lets assumes that it a situation of Equilibrium. in this situation

AD=AS= $600 million

we know that

AD= personal consumption expenditure+government consumption expenditure + private domestic investment + net exports

$600 million= ($350+ $100 + private domestic investment + $50) millions

private domestic investment = $600 - $350-$100-$50 million

= $100 million

now if imports exceed exports by $25 million the net exports will become -25 million dollars and the answer will be

private consumtion expenditure = $600 - $350- $100 + $25 million

= $175 million

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