Question

An important part of taking an economics course is to improve one’s economic literacy. Using the government’s annual report on the UAE’s economy (https://www.economy.gov.ae/EconomicalReportsEn/Annual%20Economic%20Report%202018.pdf) answer the below questions

.

Question 01: What was UAE’s GDP in 2017?

.

Question 02: One way of calculating GDP is by the expenditure method using the formula: Y = C + I + G + NX. What does each symbol in the formula mean? From the report, can you find their values in 2017? Show the calculation. Do they all add up to the GDP? Explain.

Answer 1

Q1) As given in the annual report on UAE, the GDP for 2017 is AED 1422.2 billion

Q2) Y is the total expenditure in the economy, C is the total expenditure on consumption, I is the total investment in the economy, G is the total expenditure of the government, NX is the net exports i.e exports - imports

From the report we have, C = AED 663601 million, I = 323008 million, G = 408066 million, NX = (126 +348 - 831) = -357 million

Adding these we get Y = 1394.318 billion which is very close to AED 1422.2 billion. The difference can be due to some components left out. For instance, NX is calculated on the basis of non-oil trade as oil trading volumes are not given. Once accounted for the omitted components, the sum should give us the actual GDP