In a given year, an economy has consumption of $6000, investment of $4000, government purchases of $3500, exports of $1500, imports of $1600, taxes of $1200, transfer payments of $1400, and depreciation of $1300. What is the GDP?
A) $11,200
B) $13,400
C) $14,600
D) $17,300

Question

Quizplus · Accepted Answer

GDP is calculated as the sum of consumption, investment, government purchases, and net exports (exports minus imports). In this case, GDP = $6000 (consumption) + $4000 (investment) + $3500 (government purchases) + ($1500 - $1600) (net exports) = $13,400. Taxes, transfer payments, and depreciation are not included in the GDP calculation.

In a Given Year, an Economy Has Consumption of $6000