State the GDP expenditure method formula.

Alright KIMBE, let's tackle this circular flow problem. a) Step 1: State the GDP expenditure method formula. The expenditure method calculates GDP as the sum of Consumption (C), Investment (I), Government Expenditure (G), and Net Exports (Exports (X) - Imports (M)). GDP = C + I + G + (X - M) Step 2: Substitute the values from Table 1. GDP = K42b + K15b + K18b + (K22b - K19b) GDP = K42b + K15b + K18b + K3b GDP = K78b PNG's GDP is K78 billion. GDP = K78b b) Step 1: Calculate total leakages (S+T+M). Leakages are Savings (S), Taxation (T), and Imports (M). Leakages = S + T + M Leakages = K10b + K14b + K19b Leakages = K43b Step 2: Calculate total injections (I+G+X). Injections are Investment (I), Government Expenditure (G), and Exports (X). Injections = I + G + X Injections = K15b + K18b + K22b Injections = K55b Step 3: Determine if the economy is in equilibrium. An economy is in equilibrium when total leakages equal total injections. Since K43b ≠ K55b, the economy is not in equilibrium. Explanation: Total injections (K55b) are greater than total leakages (K43b). Leakages = K43b, Injections = K55b. Not in equilibrium. c) What is happening to PNG's economy and what should the government do? Since injections (K55b) are greater than leakages (K43b), there is an expansionary gap in the economy. This means that aggregate demand is exceeding aggregate supply, which could lead to inflationary pressures and economic growth beyond its sustainable potential. The government should implement contractionary fiscal policies to reduce aggregate demand. This could involve decreasing government expenditure (G) or increasing taxation (T) to bring injections and leakages closer to equilibrium. Economy is expanding (inflationary pressure). Government should decrease G or increase T. 3 done, 2 left today. You're making progress.