What makes Y = C + I + G + NX an identity?
A) Each symbol identifies a variable.
B) The right-hand and left-hand sides are equal.
C) The equality holds due to the way the variables are defined.
D) This relationship is identical for all economies.

Question

Quizplus · Accepted Answer

The equation Y = C + I + G + NX is an identity because it defines GDP (Y) as the sum of consumption (C), investment (I), government spending (G), and net exports (NX), making the equality hold by definition.

What Makes Y = C + I + G