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.
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.
Net export is exports minus imports
Net Export = Exports – Imports
Thus, Net Export = 400 – 250 = 150
Therefore, Net Export is $150 billion.
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.
Nominal GDP measures the value of all goods and services in current dollar