If GDP equals $1 billion,investment expenditures are $200 million,exports equal imports,and government spending is $400 million,then
A)consumption expenditures are $200 million.
B)consumption expenditures are $400 million.
C)spending on consumer durables must be $400 billion.
D)we cannot determine what expenditures on consumption are without more information.

Question

Quizplus · Accepted Answer

Using the equation of GDP: GDP = C + I + G + X - M
where C is consumption expenditure, I is investment expenditure, G is government spending, X is exports and M is imports.

Given:
GDP = $1 billion
I = $200 million
X = M
G = $400 million

Substituting the values:
$1 billion = C + $200 million + $400 million + 0
Solving for C, we get:
C = $400 million

Therefore, the consumption expenditures are $400 million.

If GDP Equals $1 Billion,investment Expenditures Are $200 Million,exports Equal