When the equation X = GDP - C- I - G yields a negative X, it represents a situation in which the country:
A)experiences runaway inflation.
B)experiences robust GDP growth.
C)experiences a huge budget deficit.
D)borrows to cover the difference between production and spending.
E)lends to cover the difference between production and spending.

Question

Quizplus · Accepted Answer

When the equation X = GDP - C- I - G yields a negative X, it means that the country is spending more than it is producing or generating through consumption, investment, and government spending. Therefore, it has to borrow to cover the difference between its production and spending. Hence, option D is the correct answer.

When the Equation X = GDP - C- I -