The following table provides data for an economy in a certain year. Given the data in the table, compute the value of GDP.

Question

The following table provides data for an economy in a certain year.  Given the data in the table, compute the value of GDP.

Quizplus · Accepted Answer

Using the Expenditure Approach to computing GDP, C = 1,000, I = (500 + 100 + 300) = 900, G = (700), and Xn = (500 - 600) = -100. Adding the components, GDP = 1,000 + 900 + 700 - 100 = 2,500. Note that neither transfer payments such as payments to retirees nor the sales of existing goods are included in GDP. Also, the household purchases of durable goods are already included in consumption expenditures (C) and can therefore not be included again.

The Following Table Provides Data for an Economy in a Certain