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    gross domestic product

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    In a simple economy suppose that all income is either compensation of employees or profits. Suppose also that there are no indirect taxes. Calculate gross domestic product from the following set of numbers. Show that the expenditure approach and the income approach add up to the same figure.

    Consumption $ 5,000
    Ivestment 1,000
    Depreciation 600
    Profits 900
    Exports 500
    Compensation of employees 5,300
    Government purchases 1,000
    Saving 1,100
    Imports 700

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    Solution Preview

    As per the Expenditure Approach

    Consumption $5,000
    Investment 1,000
    Less Depreciation -600
    Net Investment 400
    Government purchases 1,000
    Exports ...

    Solution Summary

    The expert finds gross domestic product.