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

Question

Business

Ainsley Martin

9 February, 22:27

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

+5

Answers (1)

Know the Answer?

Julien Barker · Answer 1

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