How To Calculate GDP of a Country?

Assume that Country A has a population of 500,000 and only produces 1 good: cars. Country A produces 100,000 cars per year. The people in Country A purchase 90,000 cars, but there are not enough cars to fulfill all the demand. They decide to import 50,000 more. The government buys 25,000 cars for its police force, and 10,000 cars are bought by companies to transport employees to other locations to work. They also export 65,000 cars to nearby countries for sale. Discuss the following:

  • What is Country A’s GDP?

GDP =Private consumption + gross investment + government Spending + (exports -imports) = 90,000 + 25000 + 10000 +(65000-50000)=140000

  • What is the composition of GDP by percentage?

Private consumption  = 90,000/140000 x 100% = 64. 3%

government spending = 25000/140000 x 100% = 17.9%

gross investment  10000/140000 x 100% = 7.1%

Export -import difference  15000/140000 x 100% = 10.7%

  • What is the GDP per capita?

GDP per capita = GDP/Population  = 140000/500000 = 0.28

  • How does this relate to Keynesian economics?

This relate to keynesian economies since the government tend to control the volume of export and import. Despite the fact that the local manufacturer does not satisfy the population, a large volume is exported and the government imports cars to cross the demand gap. Importing is a way of increasing the government expenditure though it is not necessary, it is just done to pull the country’s economy out of depression.      

Share with your friends
Order Unique Answer Now

Add a Comment

Get Up 50% Discount on Your First OrderUp To 50% Off Your First Order Due in Less Than 48 Hours

Grab this first time Discount, and save up to 50% on your first Order Due in Less Than 48 Hours.