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15 August, 02:01

Suppose a country has government expenditures of $3,500, taxes of $2,200, consumption of $9,000, exports of $2,500, imports of $2,700, transfer payments of $750, capital depreciation of $800, and investment of $3,000. GDP equals

A. $24,450

B. $11,550

C. $15,300

D. $20,700

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  1. 15 August, 03:10
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    The correct option is C,$15,300

    Explanation:

    GDP is a short form of Gross Domestic Product which is an indicator of total goods produced in an economy in a period of one year.

    Using the expenditure method, GDP van be computed using the below formula:

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

    C is the consumption in the economy which is $9000

    I is the level of investment at $3,000

    G is the government expenditure of $3,500

    X is the export of $2,500

    M is the import of $2,700

    GDP=$9000+$3000+$3500 + ($2500-$2700)

    GDP=$15,300

    Hence the GDP is $15,300
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