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In the fictional country of Econoland, the total production values for the year 2023 are as follows:Agriculture: $100 millionManufacturing: $200 millionServices: $300 millionDuring the same year, Econoland imported goods worth $50 million and exported goods worth $70 million. The government spent $80 million, and total investments in the country were $90 million.Calculate the Gross Domestic Product (GDP) of Econoland for the year 2023 using the expenditure approach.

Question

In the fictional country of Econoland, the total production values for the year 2023 are as follows:Agriculture: 100millionManufacturing:100 millionManufacturing: 200 millionServices: 300millionDuringthesameyear,Econolandimportedgoodsworth300 millionDuring the same year, Econoland imported goods worth 50 million and exported goods worth 70million.Thegovernmentspent70 million. The government spent 80 million, and total investments in the country were $90 million.Calculate the Gross Domestic Product (GDP) of Econoland for the year 2023 using the expenditure approach.

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Solution

The expenditure approach to calculating GDP is defined as the sum of all domestic consumption, government spending, investments, and net exports (exports - imports).

Here's how you can calculate it for Econoland:

  1. Calculate the total production value: This is the sum of the values of Agriculture, Manufacturing, and Services. So, 100million+100 million + 200 million + 300million=300 million = 600 million.

  2. Calculate net exports: This is exports minus imports. So, 70million−70 million - 50 million = $20 million.

  3. Add up government spending and total investments: 80million(governmentspending)+80 million (government spending) + 90 million (investments) = $170 million.

  4. Finally, add up the values from steps 1, 2, and 3 to get the GDP: 600million(totalproductionvalue)+600 million (total production value) + 20 million (net exports) + 170million(governmentspendingandinvestments)=170 million (government spending and investments) = 790 million.

So, the GDP of Econoland for the year 2023, using the expenditure approach, is $790 million.

This problem has been solved

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