GDP Calculation Based on Components
What is the nation's GDP for the year?
If net exports for the year are −1.7 million, government expenditures are 1.6 million, investment is 1.3 million, and consumption is 4.2 million.
Answer:
The nation's GDP for the year is $5.4 million.
To calculate the GDP (Gross Domestic Product) for the year, we need to consider the four components of GDP: consumption, investment, government expenditures, and net exports.
Given the following values:
- Net exports: -1.7 million (negative value indicates a trade deficit)
- Government expenditures: 1.6 million
- Investment: 1.3 million
- Consumption: 4.2 million
To calculate the GDP, we need to sum up these four components:
GDP = Consumption + Investment + Government Expenditures + Net ExportsPlugging in the values:
GDP = 4.2 million + 1.3 million + 1.6 million + (-1.7 million)When we calculate this, we get:
GDP = 5.4 millionTherefore, the nation's GDP for the year is 5.4 million dollars. So the correct answer is $5.4 million.