Question #69789
An economy produces final goods and services
with a market value of $5,000 billion in a given
year, but only $4,500 billion worth of goods and
services is sold to domestic or foreign buyers. Is
this nation’ s GDP $5,000 billion or $4,500 billion?
Explain your answer.
with a market value of $5,000 billion in a given
year, but only $4,500 billion worth of goods and
services is sold to domestic or foreign buyers. Is
this nation’ s GDP $5,000 billion or $4,500 billion?
Explain your answer.
Expert's answer
Since GDP is calculated using the GDP = C + G + I + (X-M) formula, it is $ 5,000 billion.
X = $ 4 500 billion - produced and purchased goods and services for foreign buyers, that is,
exported to other countries.
C = $ 500 billion - Consumers buy in this country.
X = $ 4 500 billion - produced and purchased goods and services for foreign buyers, that is,
exported to other countries.
C = $ 500 billion - Consumers buy in this country.
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