Measuring a Nation’s Income

Billions	% of GDP
Per capita
Y	$17,947	100.0	$55,426
C	12,272	68.4	37,899
I	3,021	16.8	9,330
G	3,183	17.7	9,830
NX	-529	-2.9	-1,634

Active Learning 1 GDP and its components

In each case, determine how much GDP and each of its components is affected (if at all).

• Debbie spends $300 to buy her husband dinner at the finest restaurant.
• Sarah spends $1200 on a new laptop, produced in China, to use in her publishing business.
• Jane spends $800 on a computer to use in her editing business. She got last year’s model on sale for a good price from a local manufacturer.
• GM builds $500 million worth of cars, but consumers only buy $470 million worth of them.

Active Learning 1 Answers

• Debbie spends $300 to buy her husband dinner at the finest restaurant in Boston.

Consumption and GDP rise by $300.

• Sarah spends $1200 on a new laptop, produced in China, to use in her publishing business.

Investment rises by $1200, net exports fall by $1200, GDP is unchanged.

Active Learning 1 Answers

• Jane spends $800 on a computer to use in her editing business. She got last year’s model on sale for a good price from a local manufacturer.

GDP and investment (of this year) do not change (the computer was produced last year).

• GM builds $500 million worth of cars, but consumers only buy $470 million of them.