For an economy (Rs crore): final consumption expenditure 600, investment expenditure 150, government final expenditure 120, exports 80 and imports 100. What is its GDP?
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → Rs 850 crore
Given:
C = 600
I = 150
G = 120
X = 80
M = 100
By the expenditure method, GDP = C + I + G + X − M. Imports are subtracted, because C, I and G already include spending on imported goods.
GDP = 600 + 150 + 120 + 80 − 100 = Rs 850 crore
Rs 1,050 crore adds imports instead of subtracting them.
NCERT (2026-27): “2.2.2 Expenditure Method … Let Cm denote expenditure on the imports of consumption goods. Therefore C – Cm denotes that part of aggregate final consumption expenditure that is spent on the domestic firms. …” “2.2.2 Expenditure Method … (a) the final consumption expenditure on the goods and services produced by the firm. We shall denote this by Ci. …” |