Suppose that in a given country in a given year, GNP equals $2,000, investment expenditures equal $200, government expenditures equal $150, and the current account surplus equals $50. Consumption expenditures therefore equals
A) $1,000.
B) $120.
C) $140.
D) $160.
E) $230.

Question

Quizplus · Accepted Answer

GNP = C + I + G + NX
2,000 = C + 200 + 150 + 50
2,000 = C + 400
C = 2,000 - 400
C = 1,600

Therefore, consumption expenditure equals $1,600 - $200 (investment) = $1,400, and the answer is D) $160.

Suppose That in a Given Country in a Given Year