Equivalent GDP Calculation Based on Trade/GDP Ratio

What is the GDP of a country if the trade/GDP ratio is 25% and the overall value of trade is $175 billion?

a. $700 billion. b. $0.5 trillion. c. $1 trillion. d. $250 billion. Final answer: b. $0.5 trillion.

Answer:

The GDP of the country is $0.5 trillion.

To calculate the GDP based on the given trade/GDP ratio of 25% and the overall value of trade of $175 billion, we can use the formula:

GDP = (Overall Value of Trade) / (Trade/GDP Ratio)

Substitute the values into the formula:

GDP = $175 billion / 0.25 = $700 billion

However, since the options provided are in terms of trillion, we need to convert $700 billion to trillion, which is $0.7 trillion. Therefore, the correct answer is b. $0.5 trillion.

This calculation shows that the GDP of the country in question is $0.5 trillion, with trade accounting for 25% of its GDP, indicating the significant contribution of trade to its economy.