Suppose GDP is $10 billion,consumption expenditure is $7 billion,investment is $2 billion,and government expenditure on goods and services is $2 billion.Net exports of goods and services must be
A)$1 billion.
B)-$1 billion.
C)$2 billion.
D)-$2 billion.
E)$10 billion.

Question

Quizplus · Accepted Answer

GDP = C + I + G + NX
$10 billion = $7 billion + $2 billion + $2 billion + NX
NX = $10 billion - ($7 billion + $2 billion + $2 billion)
NX = -$1 billion
Since the value is negative, net exports are in deficit, which means the country is importing more than it's exporting. Therefore, the answer is (B) -$1 billion.

Suppose GDP Is $10 Billion,consumption Expenditure Is $7 Billion,investment Is