The country of Meritor uses the merit as its currency. Recent national income statistics shows that it has GDP of 900 million merits, no government transfer payments, taxes of 320 million merits, a budget surplus of 70 million merits, and investment of 300 million merits. What is the sum of its consumption and government expenditures?
A) 280 million merits
B) 350 million merits
C) 600 million merits
D) 690 million merits

Question

Quizplus · Accepted Answer

According to the national income accounting identity, GDP = C + I + G + NX. Rearranging the equation, we get C + G = GDP - I - NX. Since there is no information given about net exports (NX), we can assume it to be zero. Therefore, C + G = 900 million - 300 million = 600 million merits.

The Country of Meritor Uses the Merit as Its Currency