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

To determine GDP using the expenditure approach, we sum consumption, investment, government spending, and net exports.
First, identify the components: household consumption expenditure = 70, private (firms) investment expenditure = 60, public (government) investment expenditure = 35, government consumption = 25, exports = 11, and imports = 4.
Next, combine government spending components. In many macro models, government spending (G) includes both government consumption and public investment, so G = 25 + 35 = 60.
Then compute net exports: Exports minus Imports = 11 − 4 = 7.
Now add the pieces: C + I + G + (X − M) = 70 + 60 + 60 + 7 = 197.
Option analysis:
- a. 162 billion: This would ignore either private or public components or miscalculate net exports, underestimating total spending.
- b. 197 billion: This combines all relevant categories correctly (C = 70, I = 60, G = 60, NX = 7).
- c. 212 billion: This would overcount one or more components, such as summing government spending separately without combining into G, or adding an extra component twice.
- d. 238 billion: This would imply double counting or including an inappropriate term beyond the standard expenditure components.
Thus, the correctly calculated GDP is 197 billion, based on GDP = C + I + G + (X − M) with G being the sum of government consumption and government investment.

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