If imports are $100 million less than exports, government expenditures are $500 million, consumer expenditures are $1 billion, and gross investment spending is $500 million, then GDP is

Question

Quizplus · Accepted Answer

To calculate GDP using the expenditure approach, we add up all the components of expenditure: 
GDP = C + I + G + (X-M)
Where C = consumer expenditures
I = gross investment spending
G = government expenditures
X = exports
M = imports

Substituting the given values in the equation:
GDP = $1 billion + $500 million + $500 million + ($X - $X+100 million)
Simplifying,
GDP = $2.1 billion - $100 million = $2 billion

If Imports Are $100 Million Less Than Exports, Government Expenditures