Refer to the data in Table 1 below and answer the question that follows: Table 1: Economic Indicators for Uniland in 2016/17 [table]
Item | $ billions Household consumption expenditure | 70 Private (firms) investment expenditure | 60 Public (government) investment expenditure | 35 Government consumption | 25 Transfer payments | 15 Exports | 11 Imports | 4
[/table] Calculate gross domestic product for Uniland for 2016/17.

Question

BlackTom AI · Accepted Answer

We start by identifying the components of GDP using the expenditure approach: GDP = C + I + G + (X - M).

Option definitions:
- C is household consumption expenditure: 70.
- I is total investment, which typically includes private (firms) investment: 60.
- G is government spending on goods and services. Here government spending comprises government consumption plus public (government) investment, i.e., 25 + 35 = 60.
- X - M is net exports, calculated as exports minus imports: 11 − 4 = 7.

Now add them up: C (70) + I (60) + G (60) + NX (7) = 197.

Analysis of each option:
- a. $197 billion: This matches the calculated GDP using the standard expenditure approach, including both government consumption and government investment in G, and counting net exports correctly.
- b. $212 billion: This would require a larger G or NX value than provided, or double-counting some components; with the given figures, this value overstates GDP.
- c. $238 billion: This would imply even larger contributions from components not supported by the data (e.g., too high C, I, G, or NX), which is inconsistent with the table.
- d. $162 billion: This would undercount one or more components (likely underestimating C, I, or G); it ignores the full government and investment totals provided.

Therefore, the correct computation yields $197 billion, aligning with option a.

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