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14 February, 09:36

The following are national income account data for a hypothetical economy in billions of dollars: government purchases ($1,050); personal consumption expenditures ($4,800); imports ($370); exports ($240); gross private domestic investment ($1,130). Personal consumption expenditures are approximately what percentage of this economy?

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  1. 14 February, 11:30
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    Percentage of Personal consumption expenditures is 70.07%

    Explanation:

    The most common way to measure the national income account is gross domestic product (GDP)

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

    GDP = private consumption + gross investment + government investment + government spending + (exports - imports).

    government purchases ($1,050) is government spending

    personal consumption expenditures ($4,800) is private consumption

    imports ($370)

    exports ($240)

    gross private domestic investment ($1,130) is gross investment

    GDP = $1,050 + $4,800+$1,130+$240-$370=6.850

    Personal consumption expenditures proportion is $4,800/6.850=0,7007

    in % = 70.07%
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