Question

According to the expenditure approach, if Y is GDP, C is consumption, I is investment, G is government purchases, and NX is net exports, the national income identity can be written as:

Answer 1

The answer is Y = C + I + G + NX

Step-by-step explanation:

National income can be represented as: Y = C + I + G + NX

where Y is the national income

C is the consumers' consumption or households' expenses on goods and services

I is the firms' investment. Investment done by businesses on procuring non-current assets used in production

G is the government expenditure.

NX is the net export. Net export is the difference between the total value of export and total value of import in a year.