The GDP (Gross Domestic Product) of a country is $100 billion. If government spending is $20 billion, Investment is $ 10 billion and net exports are -$5 billion, what is consumption spending?
- $75 billion
- $80 billion
- $85 billion
- $90 billion
Explanation
To find consumption spending, we can use the GDP formula:
- GDP = Consumption (C) + Investment (I) + Government Spending (G) + Net Exports (NX)
Given:
- GDP = $100 billion
- Government Spending (G) = $20 billion
- Investment (I) = $10 billion
- Net Exports (NX) = -$5 billion (negative because it's an import)
We rearrange the formula to solve for consumption:
- Consumption (C) = GDP - (Investment + Government Spending + Net Exports)
- Substituting the given values:
- Consumption (C) = $100 billion - ($10 billion + $20 billion - $5 billion)
- = $100 billion - $25 billion = $75 billion.
Last verified on 24-04-2026
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