• Do imports subtract from GDP?: A basic explanation of GDP = C + I + G +

    2 monthes ago - By FRED

    The typical textbook treatment of GDP is the expenditure approach, where spending is categorized into the following buckets: personal consumption expenditures ; gross private investment ; government purchases ; and net exports , composed of exports and imports. Textbooks often capture this in one relatively simple equation:
    GDP = C + I + G + .
    Notice that, here, imports are subtracted. On the surface, this implies that an extra dollar of spending on imports will decrease GDP by one dollar. For example, let's assume you spend $30,000 on an imported car; because imports are subtracted , the...
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