Question

based on the following statistics, how much is consumption? total spending $11.62 trillion, investment $2.56 trillion, government spending $2.95 trillion, exports $1.80 trillion, imports $2.18 trillion. options: -$0.38 trillion, $6.49 trillion, $11.62 trillion, $5.13 trillion

Explanation:

Step1: Recall GDP formula

The formula for GDP (using the expenditure - approach) is $GDP = C+I + G+(X - M)$, where $C$ is consumption, $I$ is investment, $G$ is government spending, $X$ is exports, and $M$ is imports. We want to find $C$. Rearranging the formula gives $C=GDP - I - G-(X - M)$.

Step2: Identify values from table

From the table, $GDP=\$11.62$ trillion, $I = \$2.56$ trillion, $G=\$2.95$ trillion, $X=\$1.80$ trillion, and $M=\$2.18$ trillion.

Step3: Calculate $(X - M)$

$X - M=1.80 - 2.18=-\$0.38$ trillion.

Step4: Calculate consumption $C$

$C = 11.62-2.56 - 2.95-(- 0.38)$
$C=11.62-2.56 - 2.95 + 0.38$
$C=(11.62 + 0.38)-(2.56 + 2.95)$
$C = 12 - 5.51$
$C=\$6.49$ trillion.

Answer:

$6.49$ trillion