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28 October, 10:07

The value of U. S. imports is Multiple Choice

1. subtracted from exports when calculating GDP because imports do not constitute production in the United States.

2. subtracted from exports when calculating GDP because imports do not constitute spending by Americans.

3. added when calculating GDP because imports do not constitute production in the United States.

4. added to exports when calculating GDP because imports reflect spending by Americans.

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Answers (1)
  1. 28 October, 12:45
    0
    Option (1) is correct.

    Explanation:

    The value of imports refers to the amount of goods that are purchased by the residents of the home country from the foreign country. While calculating the gross domestic product (GDP) of a particular nation the value of imports is subtracted from the value of exports of that nation.

    The value of imports doesn't contribute towards the domestic production of United States because these goods are produced in the foreign country.

    GDP = Consumption + Investment + Government spending + Net Exports

    = Consumption + Investment + Government spending + (Exports - Imports)
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