If final consumption expenditure is 900, gross capital formation is 350, government expenditure is 240, exports are 180, and imports are 270, what is GDP at market price?
Answer and explanation
Correct answer: 1400
Using the expenditure method, GDPMP = C + I + G + (X − M). Substituting the values gives GDPMP = 900 + 350 + 240 + (180 − 270). Net exports are −90 because imports exceed exports. Therefore, GDPMP = 900 + 350 + 240 − 90 = 1400. Option A is correct; adding exports and imports without subtracting imports would produce an incorrect result.
Frequently asked questions
What is the correct answer to this question?
1400
Why is this the correct answer?
Using the expenditure method, GDPMP = C + I + G + (X − M). Substituting the values gives GDPMP = 900 + 350 + 240 + (180 − 270). Net exports are −90 because imports exceed exports. Therefore, GDPMP = 900 + 350 + 240 − 90 = 1400. Option A is correct; adding exports and imports without subtracting imports would produce an incorrect result.
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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