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19 May, 22:03

Country 1 has a gross domestic product (GDP) of $75 billion. The country has a large public sector, which accounts for $25 billion of spending. Consumer spending and investment spending account for $25 billion and $15 billion respectively. What are the values of Country 1's imports and exports?

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  1. 19 May, 22:55
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    Answer: $ 10 billion

    Explanation: The equation needed to find the values of export and import is given by:

    Y = C + I + G + (X - M)

    Where;

    Y - GDP

    C - consumption

    I - investment

    G - government spending / public sector spending

    X - exports

    M - imports

    The following values are given from the question:

    Y - $75 billion

    C - $ 25 billion

    I - $ 15 billion

    G - $ 25 billion

    X - ?

    M - ?

    75 = 25 + 15 + 25 + (X-M)

    Making (X-M) the subject of the formula

    (X-M) = 75 - 25 - 25 - 15

    = 10 billion

    The value of exports and imports is $ 10 billion
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