If Consumption Was 70 Percent of GDP and Investment and Government

question 18

Multiple Choice

If consumption was 70 percent of GDP and investment and government expenditure were both 18 percent each, then we see that

• A)we must subtract depreciation from investment so that the components of GDP do not exceed 100 percent.
• B)exports must be more than imports.
• C)GDP can be over 100 percent because it is "gross" rather than "net."
• D)the error is due to rounding.
• E)exports must be less than imports.

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Definitions:

Foreign Exchange

The trading of currencies on the forex market, allowing for the conversion of one currency into another.

Capital Account Balance

A part of a country's balance of payments that records all transactions involving the purchase or sale of assets.

Current Account Balance

The current account balance is a country's trade balance plus net income and direct payments between it and other countries, indicating a nation's foreign trade and financial status.

Statistical Discrepancy

The difference between the sum of the components of GDP calculated on the income side and the expenditure side, due to measurement errors and data omissions.