Which equation summarizes the expenditures approach to measuring GDP? \( Y=C+S \) total spending \( = \) total income \( \mathrm{GDP}=C+I+G+(X-M) \) GDP \( = \) net domestic product + depreciation
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This approach calculates GDP by summing up all expenditures made in an economy over a period of time. Show more…
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In a simple model of the economy (by John Maynard Keynes), equilibrium between national output and national expenditures is given by the equilibrium equation $$ Y=C+I+G+(X-M) $$ where $Y$ is the national income, C is consumption (which depends on national income), I is the amount of investment, $G$ is government spending, $X$ is exports, and $M$ is imports (which also depend on national income). Solve the equilibrium equation for $Y$ under the given conditions. $$\begin{aligned} &C=60+.85 Y, M=35+.2 Y, I=95, G=145, \text { and }\\ &X=50 \end{aligned}$$
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Solving Equations Algebraically
$$\begin{array}{lr} \text { Item } & \text { Billions of dollars } \\ \hline \text { Wages } & 8,000 \\ \text { Consumption expenditure } & 10,000 \\ \text { Other factor incomes } & 3,400 \\ \text { Investment } & 1,500 \\ \text { Government expenditure } & 2,900 \\ \text { Net exports } & -340 \end{array}$$ Explain the approach (expenditure or income) that you used to calculate GDP.
In a simple model of the economy (by John Maynard Keynes), equilibrium between national output and national expenditures is given by the equilibrium equation $$ Y=C+I+G+(X-M) $$ where $Y$ is the national income, C is consumption (which depends on national income), I is the amount of investment, $G$ is government spending, $X$ is exports, and $M$ is imports (which also depend on national income). Solve the equilibrium equation for $Y$ under the given conditions. $$\begin{aligned} &C=120+.9 Y, M=20+.2 Y, I=140, G=150, \text { and }\\ &X=60 \end{aligned}$$
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