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3 April, 21:39

If exports are $500, GDP is $8000, government purchases are $1200, imports are $700, and investment is $800, then consumption is $6200. a. TRUE b. FALSE

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  1. 4 April, 01:25
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    True

    Explanation:

    The GDP formula is:

    GDP = Consumption (C) + Investment (I) + Government expenditure (G) + Net exports (exports-imports)

    The problem is givind the following information:

    GDP=$8000

    I=$800

    G=$1200

    Ex = $500

    Im=$700

    We transform the formula to get C in terms of GDP, I, G and NX:

    C=GDP-I-G-NX

    C=$8000-$800-$1200 - ($500-$700)

    C=$6200
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