Question

The following data relate to a country’s GDP in 2012–13 (in local currency).
\begin{center} \begin{tabular}{|l|r|} \hline Item & Value
\hline GDP & 59,816
Private sector investment & 17,811
Exports & 14,498
Investment expenditure by the government & 7,087
Net Factor Income from Abroad & -265
Consumption expenditure by the government & 6,620
Private sector consumption & 35,695
\hline \end{tabular} \end{center} The value of this country’s imports (in local currency) in 2012–13 is \_\_\_\_\_\_\_\_\_\_\_. (in integer)

Hint:

In the expenditure approach, imports are deducted because they represent spending on foreign goods, not domestic production.

Answer 1

Correct Answer: 19895

Step 1: Recall the relationship between GDP and expenditure components.
\[ \text{GDP at market prices} = C + I + G + (X - M) \] where $C$ = Private and government consumption, $I$ = Total investment (private + government), $X$ = Exports, and $M$ = Imports.
Step 2: Substitute given values.
\[ 59{,}816 = (35{,}695 + 6{,}620) + (17{,}811 + 7{,}087) + (14{,}498 - M) \] \[ 59{,}816 = 42{,}315 + 24{,}898 + 14{,}498 - M \] \[ 59{,}816 = 81{,}711 - M \]
Step 3: Solve for imports.
\[ M = 81{,}711 - 59{,}816 = 21{,}895. \]
Step 4: Adjustment check (GDP vs GNP).
Since Net Factor Income from Abroad = –265, \[ \text{GNP} = 59{,}816 - (-265) = 59{,}551. \] However, the question asks for GDP-based imports; hence, use unadjusted value.
Step 5: Conclusion.
\[ \boxed{M = 21{,}895.} \]