What is the equation for total expenditure in an open economy?
A) Im − Ex = C + I
B) Y = C + I + G
C) Y = C + I + G + NX
D) Y + G = C + I − NX

Question

Quizplus · Accepted Answer

The equation for total expenditure in an open economy is Y = C + I + G + NX, where NX represents net exports (exports - imports). This equation accounts for all components of aggregate demand, including domestic consumption (C), business investment (I), government spending (G), and net exports. Option A and D are incorrect because they do not include government spending or net exports, which are important components of aggregate demand in an open economy. Option B includes government spending but does not account for net exports.

What Is the Equation for Total Expenditure in an Open