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Q: If for the year a country's GDP was $1315 million, consumer spending was $900 million, investment by businesses was $180 million, exports were $ 85 million and imports were $ 100 million, calculate government spending?
  • A. $ 220 million
  • B. $ 250 million
  • C. $ 580 million
  • D. $ 610 million
Correct Answer: Option B - GDP = C+ I+G + (X–M) G (Government spending) = GDP – (consumer spending + investment + (export - import) = 1315 – (900 + 180 + (85-100) = 1315 – 1065 = $250 million
B. GDP = C+ I+G + (X–M) G (Government spending) = GDP – (consumer spending + investment + (export - import) = 1315 – (900 + 180 + (85-100) = 1315 – 1065 = $250 million

Explanations:

GDP = C+ I+G + (X–M) G (Government spending) = GDP – (consumer spending + investment + (export - import) = 1315 – (900 + 180 + (85-100) = 1315 – 1065 = $250 million