Question

If exports are $500, GDP is $8000, government purchases are $1200, imports are $700, and investment is $800, then consumption is $6200. a. TRUE b. FALSE

Answer 1

Answer:

True

Explanation:

The GDP formula is:

GDP= Consumption (C)+ Investment (I)+ Government expenditure (G)+ Net exports (exports-imports)

The problem is givind the following information:

GDP=$8000

I=$800

G=$1200

Ex= $500

Im=$700

We transform the formula to get C in terms of GDP, I, G and NX:

C=GDP-I-G-NX

C=$8000-$800-$1200-($500-$700)

C=$6200