How do I find the net export?
You have been provided with the following data on the economy of Iberia: GDP was $100 billion, net taxes were $18 billion, government purchases of goods and services were $20 billion, household savings were $15 billion, consumption expenditure was $67 billion, investment was $21 billion, and exports of goods and services were $30 billion. I need to find the net exports, but I am unsure how to calculate this without knowing the import value. Can anyone provide guidance on how to derive the import number from this data to ultimately determine the net exports?
1 Answers
Net exports is exports minus imports, but you already know that, as you said in the end. So what you need is an equation that includes what you are given. That equation is the GDP equation. One way to calculate GDP, the expenditures method, looks like this:
GDP= Consumption + Investment + Government Spending, + Net Exports.
So, you have 4 of these values. Plugging in, you get (in billions):
$100=$67+$21+$20+NE.
You can see that you have $100=$108+NE. This indicates that your net exports are negative, meaning that the company imports more than they export. This may seem strange, but is the case in many countries, with the US as an example. So, your net exports is negative $8 billion, indicating imports of $38 billion.
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