1. A very small countrys gross domestic product is $12 million.

a. If government expenditures amount to $7.5 million and gross private domestic investment is $5.5 million, what would be the amount of net exports of goods and services?

2. How would your answer change in Problem 1 if the gross domestic product had been $14 million?

5. The components of a nations gross domestic product were identified and discussed in this chapter. Assume the following accounts and amounts were reported by a nation last year. Government expenditures (purchases of goods and services) were $5.5 billion, personal consumption expenditures were $40.5 billion, gross private domestic investment amounted to $20 billion, capital consumption allowances were $4 billion, personal savings were estimated at $2 billion, imports of goods and services amounted to $6.5 billion, and the exports of goods and services were $5 billion.

6. Assume that some of the data provided in Problem 5 change next year. Specifically, government expenditures increase by 10 percent, gross private domestic investment declines by 10 percent, and imports of goods and services drop to $6 billion. Assume the other information as given remains the same.

a. Determine the nations gross domestic product for next year.

b. How would your answer change in (a) if personal consumption expenditures are only $35 billion next year and capital consumption allowances actually increase by 10 percent?