Exhibit 11-8 GDP data (billions of dollars) In Exhibit 11-8, and using the expenditures approach, compute net exports (NX). Which of the following is correct?

Question

Exhibit 11-8  GDP data (billions of dollars)  In Exhibit 11-8, and using the expenditures approach, compute net exports (NX). Which of the following is correct?

Quizplus · Accepted Answer

Net exports (NX) = exports (X) – imports (M)
Using the expenditures approach, we have:

GDP = C + I + G + X – M
where C = consumption expenditures, I = investment expenditures, G = government expenditures, X = exports, and M = imports.

Solving for NX, we get:

NX = X – M 
= GDP – C – I – G
= $3,000 billion – ($2,000 billion + $500 billion + $400 billion)
= -$50 billion

Therefore, the correct answer is D) -$50 billion.

Exhibit 11-8 GDP Data (Billions of Dollars) in Exhibit 11-8