Which of the following identities shows that GDP is both total income and total expenditure?
A) GDP = Y
B) Y = PI + DI + NX
C) GDP = GNP - NX
D) Y = C + I + G + NX

Question

Quizplus · Accepted Answer

The equation Y = C + I + G + NX represents the expenditure approach to measuring GDP, meaning that GDP is the sum of consumption (C), investment (I), government spending (G), and net exports (NX). However, Y also represents total income in the economy, so this equation shows that GDP is both total income and total expenditure.

Which of the Following Identities Shows That GDP Is Both