Question

Which of the following would result in GDP for an economy equal to $10 trillion?

• A. C = $6 trillion
  I = $2 trillion
  G = $1.5 trillion
  NX = -$2 trillion
• B. C = $5 trillion
  I = $5 trillion
  G = $2 trillion
  NX = -$2 trillion
• C. C = $4 trillion
  I = $3 trillion
  G = $2 trillion
  NX = -$1 trillion
• D. C = $7 trillion
  I = $2 trillion
  G = $4 trillion
  NX = $3 trillion

Answer 1

Answer:

GDP is as follows:

Y = Consumption (C) + Investment (I) + Government expenditure (G) + Net Exports (NX)

Putting all the options values:

A]

Given:

C = $6

I = $2

G = $1.5

NX = -$2

Y = 6 + 2 + 1.5 - 2

Y = $7.5 trillion

B]

Given:

C = $5

I = $5

G = $2

NX = -$2

Y = 5 + 5 + 2 - 2

Y = $10 trillion

C]

Given:

C = $4

I = $3

G = $2

NX = -$1

Y = 4 + 3 + 2 – 1

Y = $8 trillion

D]

Given:

C = $7

I = $2

G = $4

NX =$3

Y = 7 + 2 + 4 + 3

Y = $16 trillion

Therefore from all the above calculations, Option B] is correct option that gives GDP = $10 trillion.