In an open economy. Consumption expenditure = $100 billion Investment expenditure =$ 40 billion Government expenditure = $40 billion Exports =$ 40 billion Imports = $20 billion What is the level of GDP?

A$140 billion

B$200 billion

C$220 billion

D$240 billion

Explanation: GDP = C + I + G + (X - M) = 100 + 40 + 40 + (40 - 20) = 100 + 40 + 40 + 20 = $200 billion. The marking scheme confirms answer B.

ZIMSEC Economics Paper 1, November 2009, Q36

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