If exports are 700 and imports are 520, by what amount will net exports contribute to GDP?
Answer and explanation
Correct answer: 180
Under the expenditure approach, net exports are calculated as exports minus imports: NX = X − M. Here, NX = 700 − 520 = 180. Because exports exceed imports, net exports make a positive contribution of 180 to aggregate expenditure and GDP. A value of −180 would arise only if imports were 180 greater than exports. Therefore, option A is correct.
Frequently asked questions
What is the correct answer to this question?
180
Why is this the correct answer?
Under the expenditure approach, net exports are calculated as exports minus imports: NX = X − M. Here, NX = 700 − 520 = 180. Because exports exceed imports, net exports make a positive contribution of 180 to aggregate expenditure and GDP. A value of −180 would arise only if imports were 180 greater than exports. Therefore, option A is correct.
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.
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