Paragraph 1: With a population of 2000

people, Urbania is the most populated country

in the continent of Gondwana and accounts

for 35 % of Gondwana's population. It is the

biggest oil exporter in Gondwana and also has

the largest natural gas reserves in the

continent.

Paragraph 2: Economic growth is estimated to

have been 6 % in 2019, owing to continued

strong performance mainly in services, but

also industry (apart from oil mining) and

agriculture. The oil and gas sector was in

decline, although at a slower rate than in the

previous year. Revenues from oil and gas were

estimated to have declined by 1.3 %, relative

to a decline of 13.1 % in 2018. The sharp

decline in oil prices since the third quarter of

2019 has posed major challenges to the

country's current account balance and public

finances. Oil contributes close to 90 % of

export revenues and roughly 75 % of the

country's total budget revenues.

Paragraph 3: Lower oil prices will continue to

pose strong challenges for public finance at all

levels of government during the year and will

also represent a major constraint on the ability

of the new government to introduce some of

its ambitious programs. It is focusing on anti-

corruption, the economy, including jobs and

unemployment, and security.

Paragraph 4: The central bank

of Urbania raised its base interest rate to 14 %

in July 2019. It was the second rate increase in

the year. In addition, the inflation rate kept its

upward trend and reached 16.5 % in June, the

highest since 2010.

Paragraph 5: The major medium-term

challenge for the government of Urbania is to

accelerate the creation of productive jobs

through private sector growth and to make

improvements in education (skills). So far, the

pace of job creation has been inadequate,

leading to increasing frustration among

underemploved Urbanian vouth.

Table 1:

2019

$ 4000

GDP per capita

GDP

Consumption spending $ 3.5 million

Investment spending

$ 1.5 million

Government spendina

Export revenue

Import spending

$ 1.7 million

$ 0.5 million

(b) I) Using intormation trom (lext 1,

Paragraph 1) and able 1, calculate the tota

GDP of Urbania in 2019. [3 marks]

olmusina Intormation trom able and vour

calculation of GDP in part (b)(1), calculate the

amount or government spendina in 2019.12