If total consumption is $5 billion, investments $2 billion, government purchases $1 billion, exports $1 billion, and imports $3 billion, the GDP must equal:
A) $6 billion.
B) $12 billion.
C) $9 billion.
D) $3 billion.

Question

Quizplus · Accepted Answer

GDP is calculated as the sum of consumption, investments, government purchases, and net exports (exports minus imports). Here, GDP = $5 billion (consumption) + $2 billion (investments) + $1 billion (government purchases) + ($1 billion (exports) - $3 billion (imports)) = $6 billion.

If Total Consumption Is $5 Billion, Investments $2 Billion, Government