Private consumption is 1,200, investment is 450, government consumption is 300, exports are 250, and imports are 400. What is GDP?
Answer and explanation
Correct answer: 1,800
Using the expenditure method, GDP = C + I + G + (X − M). Substituting the values gives GDP = 1,200 + 450 + 300 + (250 − 400) = 1,200 + 450 + 300 − 150 = 1,800. Imports are subtracted because they are included in consumption, investment, or government spending but are not domestic production. Therefore, option A is correct.
Frequently asked questions
What is the correct answer to this question?
1,800
Why is this the correct answer?
Using the expenditure method, GDP = C + I + G + (X − M). Substituting the values gives GDP = 1,200 + 450 + 300 + (250 − 400) = 1,200 + 450 + 300 − 150 = 1,800. Imports are subtracted because they are included in consumption, investment, or government spending but are not domestic production. 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.
Student feedback
Was this question useful?
👍 0 Helpful 👎 0 Not helpful
Yes 0% No 0%
0 responsesStudent Reviews
No published reviews yet.
