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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 5,465andthesumofconsumption,investment,andgovernmentpurchasesis5,465 and the sum of consumption, investment, and government purchases is 5,496, while exports equal $673, imports are:

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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 = 5,496+5,496 + 673 - 5,465Imports=5,465 Imports = 6,169 - 5,465Imports=5,465 Imports = 704

So, imports are $704 billion.

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