Question

Suppose there were the following expenditures on goods and services produced in the United States in 2016:

Consumption $13 trillion

Gross Investment $4 million

Government purchases $5 million

Government transfer payments $3 million

Exports $3 million

Imports $5 million

1. Calculate GDP for 2016

2. Where would this level of GDP rate among the other national Ma of the world ?

3. Indicate one item that is relevant to consumer well-being, but might not be included in GDP. Describe why it is relevant and why it might be missing.

Answer 1

(1) Consumption = $13 trillion = $13,000 billion = $13,000,000 million

GDP ($Million) = Consumption + Gross Investment + Government purchase + Exports - Imports

= 13,000,000 + 4 + 5 + 3 - 5

= 13,000,007

(2) What is "national Ma" is not understood.

(3) An item relevant to consumer well-being is quality of environment, but it is not included in GDP. Quality of environment is important because the cleaner and less polluted the environment is, the higher the well-being and standard of living of people. But since environmental quality cannot be measured, it is excluded from GDP.