If GDP (measured in billions of current dollars) is $5,465 and the sum of consumption, investment, and government purchases is $5,496, while exports equal $673, imports are:
Question
If GDP (measured in billions of current dollars) is 5,496, while exports equal $673, imports are:
Solution
The Gross Domestic Product (GDP) of a country is the sum of consumption, investment, government purchases, and net exports (which is exports minus imports). This relationship can be expressed by the following formula:
GDP = Consumption + Investment + Government Purchases + (Exports - Imports)
We can rearrange this formula to solve for imports:
Imports = Consumption + Investment + Government Purchases + Exports - GDP
Substituting the given values into this formula:
Imports = 673 - 6,169 - 704
So, imports are $704 billion.
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