Which equation is CORRECT?
A) GDP = C + I + G + IM - X.
B) GDP = C + I + G + X - IM.
C) GDP = C + I + G + X + IM.
D) GDP = C + I + G - T + TR.

Question

Quizplus · Accepted Answer

The correct formula for calculating GDP is GDP = C + I + G + (X-M), where C is consumer spending, I is investment, G is government spending, X is exports, and M is imports. However, in choice B, (X-M) has been expressed as (X-IM). This is equivalent to (X-M) since IM (imports) is subtracted from GDP in the formula while X (exports) is added to GDP. Therefore, option B is correct.

Which Equation Is CORRECT