Question

According to the expenditure approach, if Y is GDP, C is consumption, I is investment, G is government purchases, and NX is net exports, the national income identity can be written as:_____

a. Y = C + I + G
b. Y + C = I + G + NX
c. Y = C + I + G + NX
d. Y = (C + I + G) / NX
e. Y = C + I + G - NX

Answer 1

Y = C + I + G + NX

Step-by-step explanation:

Given:

Y = GDP

C = consumption

I = investment

G = government purchases

NX = net exports

Computation:

NX = Total export - Total import

GDP = consumption + investment + government purchases + [Total export - Total import]

Y = C + I + G + NX