The country of Nemedia does not trade with any other country.Its GDP is $20 billion.Its government collects $4 billion in taxes and pays out $3 billion to households in the form of transfer payments.Consumption equals $15 billion,and investment equals $2 billion.What is the value of the goods and services purchased by the government of Nemedia?

Question

Quizplus · Accepted Answer

Government spending equals GDP minus consumption, investment, and net exports. Since Nemedia does not trade with any other country, net exports are zero. Therefore, government spending equals $20 billion - $15 billion - $2 billion = $3 billion.

The Country of Nemedia Does Not Trade with Any Other