Using the expenditure approach, the Real GDP of a given economy was calculated as 250 million dollars in 2019. In 2020, the economy experienced the following: An increase of 20 million dollars in consumption. A decrease of 5 million dollars in investment. An increase of 10 million dollars in government spending. The value of all exports decreased by 5 million dollars. The value of all imports increased 15 million dollars. What is the Real GDP of the given economy in 2020? (1 point) Responses
A. 235 million dollars
B. 295 million dollars
C. 255 million dollars
D. 270 million dollars
To calculate the Real GDP of the given economy in 2020, we need to consider the changes in consumption, investment, government spending, exports, and imports:
Real GDP = Consumption + Investment + Government spending + Exports - Imports
In 2019, the Real GDP was calculated as 250 million dollars.
Now, let's calculate the changes in GDP in 2020:
- An increase of 20 million dollars in consumption: +20 million dollars
- A decrease of 5 million dollars in investment: -5 million dollars
- An increase of 10 million dollars in government spending: +10 million dollars
- The value of all exports decreased by 5 million dollars: -5 million dollars
- The value of all imports increased by 15 million dollars: +15 million dollars
Now, let's plug in the values to calculate the Real GDP in 2020:
Real GDP = 250 million dollars + 20 million dollars - 5 million dollars + 10 million dollars - 5 million dollars + 15 million dollars
Real GDP = 285 million dollars - 10 million dollars + 15 million dollars
Real GDP = 290 million dollars
Therefore, the Real GDP of the given economy in 2020 is 290 million dollars.
The correct answer is:
B. 295 million dollars