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Use the table to answer the question.

Consumption $2,000

Investment $1,000

Government Spending $1,000

Imports $500

Exports $600

The market value for each type of expenditure is given for a hypothetical country in the table above. Calculate the gross domestic product of this country.

(1 point)
Responses

$5,100
5,100 dollars

$3,900
3,900 dollars

$4,000
4,000 dollars

$4,100

1 answer

To calculate the Gross Domestic Product (GDP) using the expenditure approach, you can use the following formula:

\[ \text{GDP} = C + I + G + (X - M) \]

where:

  • \( C \) = Consumption
  • \( I \) = Investment
  • \( G \) = Government Spending
  • \( X \) = Exports
  • \( M \) = Imports

Now plug in the values from the table:

  • Consumption \( C = 2000 \)
  • Investment \( I = 1000 \)
  • Government Spending \( G = 1000 \)
  • Exports \( X = 600 \)
  • Imports \( M = 500 \)

Now calculate:

\[ \text{GDP} = 2000 + 1000 + 1000 + (600 - 500) \] \[ \text{GDP} = 2000 + 1000 + 1000 + 100 \] \[ \text{GDP} = 4100 \]

The gross domestic product of this country is $4,100.

So the correct response is:

$4,100