Question

Use the following sales to calculate GDP using the expenditure approach. Government pays $500 million in welfare. Microsoft develops a new version of Windows worth $25 million, but decides not to release it until the following year. A college student purchases a $350 airplane ticket to go to Ft. Lauderdale, FL for spring break. In a get-rich-quick scheme, John imports $10,000 worth of bananas from South America, and sells them in the U.S. for $12,000. The Japanese owned Toyota manufacturer opens a new plant in Belgrade, MT. During the year, they sell $15 million worth of new cars. American farmers export $500,000 worth of corn. Enter your answer as #########. For example, 0.35, 3450.50, 2.00

Answer 1

Solution:

According to expenditure approach, GDP = Consumption + Investment + Government expenditure + Net exports

Since the government pays $500 million in welfare, it is just like transfer of money not for the consumption of goods and services, this will not be treated as government expenditure.

Investment = $25 million, Consumption = $350 + $15 million, Import = $12000, Export = $500,000

Hence, GDP = 15,000,350 + 25,000,000 + (500000-12000) = $40,488,350.00