Last year in the country of Ecoland imports equaled exports. Ecoland's GDP was $500 million, its consumer expenditure was $380 million, and its investment was $20 million. Ecoland's government expenditure on goods and services was ________.

Question

Quizplus · Accepted Answer

In an open economy, GDP is calculated as the sum of consumer expenditure, investment, government expenditure, and net exports (exports minus imports). Given that imports equal exports, net exports are zero. Therefore, GDP = Consumer Expenditure + Investment + Government Expenditure. Plugging in the values: $500 million = $380 million + $20 million + Government Expenditure. Solving for Government Expenditure gives $100 million.

Last Year in the Country of Ecoland Imports Equaled Exports