Question

why does the spending approach to gdp include net exports? (exports - imports) in its formula?

why does the spending approach to gdp include net exports? (exports - imports) in its formula?

Homework Answers

Answer #1

GDP means total value of final goods and services produced in a country within a given period of time. Net exports include two components one is export and another is import. Export represent domestically produced goods that are purchased by foreigners that's why it is included in GDP. Exports are product produced domestically and it is value of final goods and services produced in a given period of time so it is included in GDP and exports are added to the GDP. Imports are substracted from GDP because it is value of goods and services produced in foreign country and purchased by domestic country.

please upvote if i'm able to help you it means a lot

thank you

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
why does net exports decrease gdp?
why does net exports decrease gdp?
Use the following table: Trillions GDP $15.9 Consumption 11.3 Government Spending 3 Exports 2.2 Imports 2.7...
Use the following table: Trillions GDP $15.9 Consumption 11.3 Government Spending 3 Exports 2.2 Imports 2.7 Budget balance -1.2 Value of investment spending: Value of national savings: Value of tax revenue: Value of capital inflow: Value of private savings:
Why is depreciation added back into the Net Capital Spending formula? Net Capital Spending= Ending of...
Why is depreciation added back into the Net Capital Spending formula? Net Capital Spending= Ending of net fixed assets- beginning of net fixed assets+ depreciation
Provide an informative explanation of the performance of Imports, exports, and GDP in South Africa between...
Provide an informative explanation of the performance of Imports, exports, and GDP in South Africa between 1980 and 2017.
1. Exports, Imports, Net exports. Trade surplus, trade deficit, trade balance. What factors influence a country’s...
1. Exports, Imports, Net exports. Trade surplus, trade deficit, trade balance. What factors influence a country’s exports? Imports? Net exports(NX)? 2. What is a net capital outflow (NCO)? What factors influence net capital outflow? What can you say about NCO and Net exports? What does national saving equal to in open economy? (S=I+NCO) 3. Define Nominal Exchange rate and real exchange rate. What does it mean when a currency appreciates? How do you calculate real exchange rate and what does...
Part 3: Explain the impact of an increase in net exports on real GDP, assuming the...
Part 3: Explain the impact of an increase in net exports on real GDP, assuming the economy is operating below its potential output. Explain why it is difficult for a country to boost its net exports by increasing its tariffs during a global recession.
1. Define business inventories and explain how they are counted in GDP. 2. Calculate government spending...
1. Define business inventories and explain how they are counted in GDP. 2. Calculate government spending given the following information: GDP = $300 million Consumer spending = $100 million Financial investment spending = $35 million Investment spending = $60 million Exports = $20 million Imports=$5 million 3. Calculate consumer spending given the following information: GDP = $110 million Government spending = $38 million Financial investment spending = $12 million Investment spending = $18 million Net exports = $2 million Show...
Some countries have low ratios of international trade (exports + imports) to GDP (such as the...
Some countries have low ratios of international trade (exports + imports) to GDP (such as the United States), while, in other countries, the ratio of international trade to GDP exceeds one. How is it possible for trade to exceed the value of GDP?
Table 10.3 ​ Equilibrium Real GDP C I Exports Imports Year 1 $9,350 $7,500 $1,350 $1,800...
Table 10.3 ​ Equilibrium Real GDP C I Exports Imports Year 1 $9,350 $7,500 $1,350 $1,800 — Year 2 $11,450 $8,900 — $2,350 $1,600 Assume that government spending is zero for this economy. Refer to Table 10.3. Assume that the economy is at equilibrium in both years, and that government spending is zero for this economy. The change in investment spending from year 1 to year 2 is:
How to fiind out the percentages of GDP for each expenditures component. (Exports - Imports is...
How to fiind out the percentages of GDP for each expenditures component. (Exports - Imports is one component). Could you please proviide your answer with an example? Thanks