If C = 5,000, I = 1,800, G = 1,200, X = 900, and M = 700, what is GDP using the expenditure method?
Answer and explanation
Correct answer: 8,200
Using the expenditure identity, GDP = C + I + G + (X − M). Net exports are X − M = 900 − 700 = 200. Therefore, GDP = 5,000 + 1,800 + 1,200 + 200 = 8,200. Option 8,900 would fail to subtract imports, while 9,600 would add exports and imports incorrectly. Therefore, option B is the only correct answer.
Frequently asked questions
What is the correct answer to this question?
8,200
Why is this the correct answer?
Using the expenditure identity, GDP = C + I + G + (X − M). Net exports are X − M = 900 − 700 = 200. Therefore, GDP = 5,000 + 1,800 + 1,200 + 200 = 8,200. Option 8,900 would fail to subtract imports, while 9,600 would add exports and imports incorrectly. Therefore, option B is the only correct answer.
Which subject and chapter does this question cover?
This is a Class 12 Economics question. Chapter: National Income and Related Aggregates. Topic: Methods of calculating national income - Expenditure Method.
