What is the GDP of the economy in a given year?

Given the following data:

- Consumption: $6000
- Investment: $4000
- Government purchases: $3000
- Exports: $1500
- Imports: $500

What is the GDP?

A. $12,000

B. $15,000

C. $10,000

D. $14,000

Answer:

In the given year, the economy's GDP amounts to $14,000, which is the total value of all final goods and services produced, including consumption, investment, government purchases, exports, and imports. Option D.

To calculate the Gross Domestic Product (GDP), we need to sum up the total value of all final goods and services produced within the economy in a given year. GDP can be calculated using the expenditure approach, which considers the various components of spending in the economy.

In this case, the given components are:

Consumption = $6000
Investment = $4000
Government purchases = $3000
Exports = $1500
Imports = $500

To calculate GDP, we add up these components: GDP = Consumption + Investment + Government purchases + Exports - Imports

GDP = $6000 + $4000 + $3000 + $1500 - $500

GDP = $14,000

Therefore, the GDP of the economy in the given year is $14,000. So Option D is correct.