In a mixed open economy,if aggregate expenditures exceed GDP: A) I_g + X + G = C_a. B) C_a + I_g + X_n + G S. D) I_g + X + G S_a + M + T.

Question

In a mixed open economy,if aggregate expenditures exceed GDP: A) I_g + X + G = C_a. B) C_a + I_g + X_n + G < domestic output. C) I_g > S. D) I_g + X + G > S_a + M + T.

Quizplus · Accepted Answer

In a mixed open economy, if aggregate expenditures (I_g + X + G) exceed GDP (S_a + M + T), the country is experiencing a trade deficit (imports exceed exports), which is reflected in the negative net exports (M - X) term of the GDP equation. Therefore, choice D is the correct answer. Choices A, B, and C do not accurately describe the relationship between aggregate expenditures and GDP in a mixed open economy.

In a Mixed Open Economy,if Aggregate Expenditures Exceed GDP