Chapter 7, Problem 7P

To determine

1. United States GDP for 2016
2. Absolute change in 2015 and 2014
3. Component of G.D.P which was the largest and the smallest
4. Year in which net exports were positive
5. Size of government spending during 1940 and the reasons for it.

Concept Introduction:

Gross Domestic Product (GDP): It refers to the gross money value or gross market value of all the finished goods and the services produced by the normal resident and the non-residents within the borders of the country in an accounting year.

The formula to calculate the value of GDP is,

Here,

• C is consumption spending.
• I is investment spending.
• G is government purchases.
• X is export.
• M is import.