What is the GDP of the economy in a given year?
Given the following data:
- Consumption: $6000
- Investment: $4000
- Government purchases: $3000
- Exports: $1500
- Imports: $500
What is the GDP?
A. $12,000
B. $15,000
C. $10,000
D. $14,000
Answer:
In the given year, the economy's GDP amounts to $14,000, which is the total value of all final goods and services produced, including consumption, investment, government purchases, exports, and imports. Option D.
To calculate the Gross Domestic Product (GDP), we need to sum up the total value of all final goods and services produced within the economy in a given year. GDP can be calculated using the expenditure approach, which considers the various components of spending in the economy.
In this case, the given components are:
Consumption = $6000
Investment = $4000
Government purchases = $3000
Exports = $1500
Imports = $500
To calculate GDP, we add up these components: GDP = Consumption + Investment + Government purchases + Exports - Imports
GDP = $6000 + $4000 + $3000 + $1500 - $500
GDP = $14,000
Therefore, the GDP of the economy in the given year is $14,000. So Option D is correct.