If personal consumption expenditures are $1 billion, government purchases are $2 billion, gross private domestic investments are $4 billion and net exports are $5 billion, then GDP is:
A) $12 billion
B) $8 billion
C) $7 billion
D) $2 billion

Question

Quizplus · Accepted Answer

GDP is calculated as the sum of personal consumption expenditures, government purchases, gross private domestic investments, and net exports. Therefore, GDP = $1 billion + $2 billion + $4 billion + $5 billion = $12 billion.

If Personal Consumption Expenditures Are $1 Billion, Government Purchases Are