The country of Meritor uses the merit as its currency. Recent national income statistics shows that it has GDP of 700 million merits, no government transfer payments, taxes of 210 million merits, a budget surplus of 60 million merits, and investment of 100 million merits. What is the sum of its consumption and government expenditures?
A)600 million merits
B)560 million merits
C)490 million merits
D)470

Question

Quizplus · Accepted Answer

The budget surplus is the difference between taxes and government expenditures. With a surplus of 60 million merits and taxes of 210 million merits, government expenditures are 150 million merits. GDP is the sum of consumption, investment, and government expenditures. With GDP of 700 million merits and investment of 100 million merits, consumption plus government expenditures equals 700 - 100 = 600 million merits.

The Country of Meritor Uses the Merit as Its Currency