Which of the following equations is the GDP identity in an open economy?
A)Y = C + I + G + NCO
B)NX = -NCO
C)NCO = S - I+NX
D)Y = C + I + G - NX

Question

Quizplus · Accepted Answer

In an open economy, there is a flow of goods and services between the domestic economy and the rest of the world. The GDP identity in an open economy includes net exports (NX) which is the difference between the value of a country's exports and imports. Therefore, option D - Y = C + I + G - NX, is the correct equation as it includes net exports.

Which of the Following Equations Is the GDP Identity in an Open