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12 February, 07:16

Gross Domestic Product equals $1.2 trillion. If consumption equals $690 billion, investment equals $200 billion, and government spending equals $260 billion, then: Select one: a. exports exceed imports by $50 billion. b. imports exceed exports by $50 billion. c. imports exceed exports by $150 billion. d. exports exceed imports by $150 billion.

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  1. 12 February, 11:12
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    a. exports exceed imports by $50 billion

    Explanation:

    The formula to calculate GDP of a country is,

    GDP = Consumption (C) + Investment (I) + Govt. spending (G) + (Exports (X) - Imports (M))

    Thus, we already know the three components and the figure of total GDP. To find out net exports, we simply equate both figures.

    1.2 trillion = 1200 billion

    1200 = 690 + 200 + 260 + Net exports (X-M)

    1200 = 1150 + Net exports

    Net exports = $50 bn

    A net exports of positive $50bn means that exports exceed imports by $50bn and answer a is correct.
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