In a static (accounting) sense, a nation's GDP can be represented by the following equation: where C = consumption spending, I = investment spending, G = government spending, X = exports of goods and services, and M = imports of goods and services.
A) GDP = C + I + G + M - X
B) GDP = C + I + G + X - M
C) GDP = C + I - G + X - M
D) GDP = C + I + G + X + M

Question

Quizplus · Accepted Answer

GDP is calculated as the sum of all final goods and services produced within a country's borders in a given period. Consumption spending (C), investment spending (I), government spending (G), exports (X), and imports (M) are all components that make up a nation's GDP. Since exports of goods and services (X) add to GDP and imports of goods and services (M) detract from GDP, the correct formulation is GDP = C + I + G + X - M.

In a Static (Accounting) Sense, a Nation's GDP Can Be