$\begin{array} { l c }
\hline { \text { Item } } & \text { Billions of dollars } \
\hline \text { Wages } & 5,000 \
\text { Consumption expenditure } & 3,500 \
\text { Interest, rent, and profit } & 1,500 \
\text { Investment } & 1,200 \
\text { Statistical discrepancy } & 0 \
\text { Net exports } & - 300 \
\text { Indirect taxes minus subsidies } & 500 \
\text { Depreciation } & 800 \
\hline
\end{array}$
The table above has information about an economy. Using this information, GDP equals
A)$6,500 billion.
B)$7,800 billion.
C)$8,500 billion.
D)$7,000 billion.
E)some amount that cannot be calculated without information on the amount of government expenditures.

Question

$\begin{array} { l c } 
\hline  { \text { Item } } & \text { Billions of dollars } \
\hline \text { Wages } & 5,000 \
\text { Consumption expenditure } & 3,500 \
\text { Interest, rent, and profit } & 1,500 \
\text { Investment } & 1,200 \
\text { Statistical discrepancy } & 0 \
\text { Net exports } & - 300 \
\text { Indirect taxes minus subsidies } & 500 \
\text { Depreciation } & 800 \
\hline
\end{array}$
The table above has information about an economy. Using this information, GDP equals
A)$6,500 billion.
B)$7,800 billion.
C)$8,500 billion.
D)$7,000 billion.
E)some amount that cannot be calculated without information on the amount of government expenditures.

Quizplus · Accepted Answer

GDP can be calculated using the expenditure approach: GDP = Consumption + Investment + Government Expenditures + Net Exports. Here, GDP = $3,500 + $1,200 + Government Expenditures + (-$300). Since Government Expenditures are not provided, we use the income approach: GDP = Wages + Interest, Rent, and Profit + Indirect Taxes minus Subsidies + Depreciation. Thus, GDP = $5,000 + $1,500 + $500 + $800 = $7,800 billion.

The Table Above Has Information About an Economy