Calculate Gross Domestic Product (GDP)

What is the formula to calculate Gross Domestic Product (GDP)?

a. GDP = Consumption + Government Spending + Gross Investment + (Exports - Imports)

Answer:

The correct formula to calculate Gross Domestic Product (GDP) is: GDP = Consumption + Government Spending + Gross Investment + (Exports - Imports)

To calculate the Gross Domestic Product (GDP) of a country, the formula used is GDP = Consumption + Government Spending + Gross Investment + (Exports - Imports). This formula takes into account the total consumption, government spending, gross investment, and net exports of a country. By applying this formula to the given data, we can determine the GDP of the national economy.

Calculation:

Given data: Consumption = $6000 Government Spending = $1,200 Gross Investment = $2,500 Exports = $2,000 Imports = $1,000

Substitute the values into the GDP formula: GDP = $6,000 + $1,200 + $2,500 + ($2,000 - $1,000) GDP = $6,000 + $1,200 + $2,500 + $1,000 GDP = $10,700

Therefore, the Gross Domestic Product (GDP) for the national economy is $10,700.

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