The Economy Of Ukzten In 2010 Consumption

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In the economy of Ukzten in 2010, several key economic variables are given: consumption was 60% of GDP, government purchases were $212, imports were $67, and 67% of the value of exports. Investment was one-half of the value of consumption. The task is to determine Ukzten's GDP for that year based on this information.

Paper For Above instruction

Determining the Gross Domestic Product (GDP) of an economy like Ukzten in 2010 requires understanding the relationships among various macroeconomic components and applying appropriate formulas. Given the data — consumption (C), government purchases (G), imports (M), exports (X), and investment (I) — we can utilize the national income identity and known proportions to compute the GDP.

The first step is to interpret the data correctly. Consumption is 60% of GDP, so we express it as C = 0.6Y, where Y represents GDP. The investment is half of consumption, thus I = 0.5C. Additionally, imports add to expenditure, while exports subtract from it, with the net export (NX) being X - M. We know imports (M) = $67, and government purchases G = $212.

The export value is given indirectly: exports (X) is 67% of its own total value, which implies X = 0.67X, indicating that the total export value is consistent with the proportion. However, to find X explicitly, we consider the net exports as part of the expenditure approach formula:

GDP = C + I + G + (X - M)

Substituting the known values and expressions: GDP = 0.6Y + 0.5(0.6Y) + 212 + (X - 67)

But since X is linked with its percentage (67%), assuming the entire export is 67% of some total, and knowing that export value is 67% of the total exports, we need to find the total X to substitute into the equation.

Given the proportional relationship: X = 0.67 * (total exports). The total exports, in monetary terms, are provided indirectly via the percentage, but the precise total value of exports (X) is not explicitly given beyond that percentage. However, since exports depend on the total export value, and given that exports are 67% of their own total, it means that the total export value X is consistent with the data. In practice, the percentage indicates that the value of exports is a certain proportion of some total, which in this context simplifies to knowing the actual exports.

Considering the data, to calculate the GDP, we proceed with the detailed computation:

  • Consumption (C) = 0.6Y
  • Investment (I) = 0.5 C = 0.5 0.6Y = 0.3Y
  • Net exports (X - M) = ?

We know imports (M) = $67, and the total exports are 67% of the export value. If we assume that the export value (X) is the total amount that, when multiplied by 0.67, gives us the known export value, then the calculations become a matter of setting up the equation for GDP and solving for Y.

By rearranging the GDP formula and substituting known variables, an algebraic approach yields:

Y = C + I + G + (X - M)


Y = 0.6Y + 0.3Y + 212 + (X - 67)

Since we're told that exports are 67% of their total, and the total export value is X, which is consistent within our calculation, we derive that total exports are effectively given or can be calculated based on the data provided. Given that the options for GDP are $2790, $1790, $2450, and $1450, the method involves testing these values against the known proportions to find the correct one.

Applying an approximate calculation using the data, we find that a GDP of $2450 aligns with the proportional relationships among consumption, investment, government purchases, imports, and exports. This is consistent with macroeconomic identities and proportions provided in the problem.

Thus, the GDP for Ukzten in 2010 is approximately $2450.

References

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