Data Table (Econland - Year 2024):
\begin{tabular}{|l|l|}
\hline Category & Value (in billions) \\
\hline Personal Consumption & $2,500 \\
\hline Private Investment & $1,200 \\
\hline Government Expenditures & $1,800 \\
\hline Exports & $600 \\
\hline Imports & $900 \\
\hline
\end{tabular}
Task:
1. Calculate GDP using the expenditure approach.
2. Show your working.
3. Submit your answer with a brief explanation.
Answer (2)
GDP is calculated using the expenditure approach.
The formula is: G D P = P erso na l C o n s u m pt i o n + P r i v a t e I n v es t m e n t + G o v er nm e n t E x p e n d i t u res + E x p or t s − I m p or t s .
Substituting the given values: G D P = $2 , 500 + $1 , 200 + $1 , 800 + $600 − $900 .
The GDP for Econland in 2024 is $5 , 200 billion.
Explanation
Understanding the Problem We are given the values for Personal Consumption, Private Investment, Government Expenditures, Exports, and Imports for Econland in the year 2024. Our goal is to calculate the Gross Domestic Product (GDP) using the expenditure approach. The expenditure approach calculates GDP by summing up all spending within an economy.
Applying the Formula The formula for calculating GDP using the expenditure approach is: G D P = P erso na l C o n s u m pt i o n + P r i v a t e I n v es t m e n t + G o v er nm e n t E x p e n d i t u res + E x p or t s − I m p or t s We will substitute the given values into this formula.
Calculating GDP Substituting the values, we get: G D P = $2 , 500 + $1 , 200 + $1 , 800 + $600 − $900 Now, let's add the values: $2 , 500 + $1 , 200 + $1 , 800 + $600 = $6 , 100 Then subtract the imports: $6 , 100 − $900 = $5 , 200 So, the GDP is $$5,200 billion.
Final Answer Therefore, the GDP for Econland in 2024, calculated using the expenditure approach, is $$5,200 billion.
Examples
Understanding GDP is crucial for assessing a country's economic health. For example, if you're analyzing whether to invest in Econland, knowing its GDP helps you understand the size of its economy. A higher GDP generally indicates a stronger economy, which can mean more stable and profitable investment opportunities. Tracking GDP changes over time also helps in predicting economic trends and making informed financial decisions.
The GDP of Econland for the year 2024, calculated using the expenditure approach, is $5,200 billion. This was derived by adding personal consumption, private investment, government expenditures, and exports, and then subtracting imports. The calculation shows the total spending in the economy, reflecting its economic health.
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