Which of the following is correct?
A)IM + X = G − T
B)I + G + T = S + X − M
C)I + G + X = S + T + IM
D)I + T + G = S − X − IM

Question

Quizplus · Accepted Answer

The equation represents the national income accounting identity, where I (investment), G (government spending), X (exports), and T (taxes) contribute to the national income (S) and the imports (M) decrease the national income. Therefore, the correct equation should have a positive contribution from exports and negative contribution from imports. C satisfies this condition with I + G + X = S + T - IM. The other options do not have the correct sign for the contribution of imports and/or exports.

Which of the Following Is Correct