Question:
Assume an economy with 3 industries. Industry A uses Rs. 30m imported inputs and sells to B for Rs. 100m. Industry B uses no imports, sells to C for Rs. 300m and exports Rs. 60m. Industry C uses Rs. 30m imported inputs and sells Rs. 500m to consumers. What is the GDP?
(1) Rs. 440m
(2) Rs. 500m
(3) Rs. 900m
(4) Rs. 960m
(5) Rs. 990m
Correct Answer:
(2)
Answer Explanation:
Calculate the Value Added (VA) for each industry (VA = Output – Intermediate Inputs). Industry A’s VA = 100 – 30 = 70. Industry B’s Output is 360 (300 to C + 60 export); its inputs are 100 (from A); VA = 360 – 100 = 260. Industry C’s VA = 500 – (300 from B + 30 imports) = 170. Total GDP = Sum of VA = 70 + 260 + 170 = 500 million.
Topic: National Income Year: 2018
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