Ethan purchases a new house for $170,000.Ethan's purchase of the house contributes $170,000 to which magnitude in the identity Y = C + I + G?
A)C
B)I
C)G
D)None of the above are correct.

Question

Quizplus · Accepted Answer

In the identity Y = C + I + G, I represents investment expenditure by firms. Ethan's purchase of the house can be considered as investment expenditure by him, hence it contributes to the magnitude of I in the identity.

Ethan Purchases a New House for $170,000