If C is consumption,I is investment,G is government purchases and NX is net exports,according to the expenditure approach,Y would stand for ________;and the national income identity could be written as ________.
A)transfers;Y = C + I + G - NX
B)CPI;Y = C + I + G + NX
C)GDP;Y - C - I = G + NX
D)income;Y = C - I - G + NX
E)the real interest rate;Y = C + I + G + NX

Question

Quizplus · Accepted Answer

According to the expenditure approach, Y represents GDP. The national income identity is Y = C + I + G + NX, in which Y represents GDP, C is consumption, I is investment, G is government purchases and NX is net exports. Option A is not correct because transfers are not a part of the national income identity. Option B is incorrect because CPI (Consumer Price Index) is a measure of inflation and not a component of the national income identity. Option D is incorrect as it does not include net exports. Option E is incorrect as it refers to the real interest rate which is an interest rate adjusted for inflation and not a part of the national income identity.

If C Is Consumption,I Is Investment,G Is Government Purchases and NX