Assume a small nation has the following statistics: its ...

[JMatthes]

Assume a small nation has the following statistics: its consumption expenditure is 15 million, investment is 2 million, government purchases of goods and services is 1 million, exports of goods and services to foreigners is 1 million, and imports
 
  of goods and services from foreigners is 1.5 million. Calculate this nation's GDP.

Question 2

A normal profit for a self-employed entrepreneur is I. an opportunity cost. II. part of the implicit rental rate of the funds invested in the business.
 
  A) only I
  B) only II
  C) both I and II
  D) neither I nor II

[nekcihc358]

Answer to Question 1

The nation's GDP equals the sum of consumption expenditure, investment, government purchases of goods and services, and net exports of goods and services, where net exports of goods and services equals of goods and services exports minus imports of goods and services. So, GDP = 15 million + 2 million + 1 million + 1 million - 1.5 million = 17.5 million.

Answer to Question 2

A