Consumption expenditure includes durable goods, non durable goods and services expenditures. Therefore, Consumption Expenditure = Durable Goods + Non Durable Goods + Services

Question 18

Consumption expenditure includes durable goods, non durable goods and services expenditures.

Therefore, Consumption Expenditure = Durable Goods + Non Durable Goods + Services

Consumption expenditure = 800+700+500 = 2,000

Thus, Consumption expenditure is $2,000 billion.

Question 19

Investment in an economy equals the investments made by locals and those made by foreigners minus depreciation of capital. These include residential investments such as construction of houses.

Therefore, Investment = Gross Investment – depreciation

= Non residential Investments +Residential Investment +Inventories

Investment      = 400 + 50 – 25 = 425

Thus, investment is $425 billion.

Question 20

Net export is exports minus imports

Net Export = Exports – Imports

Thus, Net Export = 400 – 250 = 150

Therefore, Net Export is $150 billion.

 

Question 21

Gross domestic product is the total market value of goods and services produced in an economy within a year. Includes all goods produced by citizens, foreigners and companies within the economy.

Gross Domestic Product = Consumption Expenditure + Gross Private Investment +Government Purchases + Net Exports.

Gross Domestic Product = 2,000 + 425 + Government Purchases + 150

Government Purchases are goods and services by the government; both federal and state, to provide public services and spend on social capital.

Government Purchases = Federal Purchases of goods + State and Local purchase of goods

Therefore, Government Purchases = 300 + 200 = 500

Thus, Government purchase is $500 billion.

Hence, GDP = 2,000 + 425 + 500 + 150 = 3,075

Thus, Gross Domestic Product is $3,075 billion.

 Question 22

Nominal GDP measures the value of all goods and services in current dollar

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