Question

Find National Income from below using the Income =Expenditure approach if Consumption =$6000; Investment =$1000; Govt. Expenditure =$2000; Exports =$2500 and Imports =$2000.

A) $8500
B) $9500
C) $11,500
D) $12,500

Answer 1

The National Income using the Income = Expenditure approach is calculated by adding Consumption, Investment, Government Expenditure, and Net Exports, resulting in an answer of $9500.

Step-by-step explanation:

To calculate the National Income using the Income = Expenditure approach, we can sum up the Consumption, Investment, Government Expenditure, and Net Exports (which is Exports minus Imports). Given:

• Consumption (C) = $6000
• Investment (I) = $1000
• Government Expenditure (G) = $2000
• Exports (X) = $2500
• Imports (M) = $2000

Net Exports (X - M) would be $2500 (exports) - $2000 (imports) = $500.

Now, using the formula:

National Income = C + I + G + (X - M)

National Income = $6000 (Consumption) + $1000 (Investment) + $2000 (Government Expenditure) + $500 (Net Exports)

National Income = $9500

Therefore, the answer is B) $9500.