Using the expenditure approach, the Real GDP of a given economy was calculated as 250 million dollars in 2019. In 2020, the economy experienced the following:
An increase of 20 million dollars in consumption.
A decrease of 5 million dollars in investment.
An increase of 10 million dollars in government spending.
The value of all exports decreased by 5 million dollars.
The value of all imports increased 15 million dollars.
What is the Real GDP of the given economy in 2020?
(1 point)
Responses
235 million dollars
235 million dollars
295 million dollars
295 million dollars
270 million dollars
270 million dollars
255 million dollars
To calculate the Real GDP of the given economy in 2020, we need to adjust the 2019 GDP using the changes in consumption, investment, government spending, exports, and imports.
The increase in consumption adds $20 million to the GDP.
The decrease in investment subtracts $5 million from the GDP.
The increase in government spending adds $10 million to the GDP.
The decrease in exports subtracts $5 million from the GDP.
The increase in imports adds $15 million to the GDP.
Adding all these changes together:
20 - 5 + 10 - 5 + 15 = 35
Therefore, the Real GDP of the given economy in 2020 is $35 million higher than in 2019.
250 + 35 = 285 million dollars
So, the correct answer is 285 million dollars.