Which of the following equations is always correct in an open economy?
A)NX = Y - C - G - I
B)NX = S - I
C)NX = NCO
D)All of the above are correct.

Question

Quizplus · Accepted Answer

Option A represents the national income identity in an open economy, where net exports (NX) equals the difference between domestic income (Y) and domestic expenditure (C + G + I). 
Option B represents the saving-investment identity in an open economy, where net exports (NX) equal the difference between domestic saving (S) and domestic investment (I). 
Option C represents the net capital outflow identity, where net exports (NX) equal net capital outflow (NCO). 
Therefore, all three options are correct in an open economy.

Which of the Following Equations Is Always Correct in an Open