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23 January, 12:17

The gross domestic product of Ritzland during a particular year was $120,000. If the expenditure on investment was $16,000, the expenditure incurred by the government was $35,000, the value of exports was $10,000, and the value of imports was $22,000, calculate the expenditure on consumption.

A) $44,000

B) $37,500

C) $19,000 D

) $81,000

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  1. 23 January, 12:32
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    The correct option is D, expenditure on consumption is $81000

    Explanation:

    The formula for Gross Domestic Product is given below:

    Y=G+I+C + (X-M)

    G is Government expenditure

    I is Investment

    C is Consumption Expenditure

    X is exports

    M is imports

    By slotting the variables into the formula, we have:

    $120000=$35000+$16000+C + ($10000-$22000)

    $120000=$35000+$16000+C-$12000

    C=$120000-$35000-$16000+$12000

    C=$810000

    It is crystal clear that the unknown, expenditure on consumption is $81000

    Note that X-M could also be called net exports and can either be a negative or positive value depending on whether export is higher or import
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