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1 May, 21:54

Suppose the economy is closed with national saving of $3 trillion, consumption of $10 trillion, and government purchases of $4 trillion. What is GDP?

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  1. 2 May, 00:46
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    The correct answer is: $17 trillion.

    Explanation:

    The Gross Domestic Product or GDP represents the overall market value of all the goods and services a country produces and it measures the size of the economy. The GDP is determined with the following formula:

    GDP = C + G + I + NX

    where:

    C: private consumption or consumer spending G: government spending I: businesses' capital spending NX: net exports (exports - imports)

    In the example:

    GDP = $3 trillion + $10 trillion + $4 trillion = $17 trillion
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