The basic definition of GDP used in the Keynesian framework is
A) GDP = C + I + S + X
B) GDP = C + I + G + X
C) GDP = C + I + G + NX
D) GDP = C + S + B + NX

Question

Quizplus · Accepted Answer

The basic definition of GDP used in the Keynesian framework is GDP = C + I + G + NX. This formula indicates that GDP is composed of four components: consumption (C), investment (I), government spending (G), and net exports (NX). This definition is consistent with the Keynesian view that government intervention can help stabilize and stimulate the economy, and that exports can contribute positively to economic growth. Option A is incorrect because it includes savings (S) instead of government spending (G). Option B is incorrect because it includes government spending (G) instead of net exports (NX). Option D is incorrect because it includes a term (B) that is not relevant to GDP.

The Basic Definition of GDP Used in the Keynesian Framework