Answer to Question #149181 in Macroeconomics for Catherine Tignetti

Question

During the past year, consumption expenditures increased by $13.5 billion, gross investment increased by $5.8 billion, and government purchases declined by $10.4 billion. In addition, the country experienced a trade deficit of $2.9 billion did the country's GDP increase or decrease and by how much?

Answer 1

The country's GDP decrease

GDP = C + G + I + NX

 (Consumption expenditures + Gross investment )-(government purchases-trade deficit)

$(13.5+5.8)-(10.4$+2.9)

$19.3-13.3$

$=\$6$ billion