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Class 12EconomicsNational Income and Related AggregatesMethods of calculating national income - Expenditure MethodMediumLevel 28

In an economy, private final consumption is 600, gross investment is 200, government consumption is 150, exports are 90, and imports are 140. What is GDP at market price?

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Answer and explanation

Correct answer: 900

Using the expenditure method, GDP at market price is calculated as C + I + G + (X − M). Substituting the values gives 600 + 200 + 150 + (90 − 140) = 950 − 50 = 900. Imports are subtracted because they are not domestic production, while exports are added because they represent domestic production sold abroad. Hence, option A is correct.

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GDP at market priceexpenditure methodnet exportsnumerical economicsMethods of calculating national income Expenditure MethodNational Income and Related AggregatesEconomicsClass 12 MCQ

Frequently asked questions

What is the correct answer to this question?

900

Why is this the correct answer?

Using the expenditure method, GDP at market price is calculated as C + I + G + (X − M). Substituting the values gives 600 + 200 + 150 + (90 − 140) = 950 − 50 = 900. Imports are subtracted because they are not domestic production, while exports are added because they represent domestic production sold abroad. Hence, 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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10 more MCQs
  1. 1Studying income, output, and expenditure together in macroeconomics is linked with which idea?
  2. 2On what basis is national income estimated in the expenditure method?
  3. 3Private final consumption expenditure is generally denoted by which symbol in the expenditure method?
  4. 4Investment expenditure is denoted by which symbol in the expenditure method?
  5. 5Government final consumption expenditure is written with which symbol in the expenditure method?
  6. 6What is the difference between exports and imports called?
  7. 7Under the expenditure method, which of the following is classified as gross domestic capital formation?
  8. 8If C = 500, I = 150, G = 200, X = 100 and M = 80, what will be GDP at market price (GDPₘₚ)?
  9. 9Household spending on food, clothing and education falls under which category?
  10. 10Purchase of a new machine is included in which component of the expenditure method?
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