In an open economy,gross domestic product equals $1,650 billion,government expenditure equals $250 billion,and savings equals $550 billion.What is consumption expenditure?
A)$250 billion
B)$300 billion
C)$550 billion
D)$850 billion

Question

Quizplus · Accepted Answer

GDP = C + I + G + NX
Given, GDP = $1,650 billion and G = $250 billion
So, 1,650 = C + I + 250 + NX
Also, given that saving = $550 billion, 
S = I
So, 550 = I
Substitute the value of I in the first equation, we get
1,650 = C + 550 + 250 + NX
Solving the equation for C, we get
C = $850 billion. Therefore, the answer is option D.

In an Open Economy,gross Domestic Product Equals $1,650 Billion,government Expenditure