What is the formula for an open economy's GDP?
A)Y = C + I + G
B)Y = C + I + G + T
C)Y = C + I + G + S
D)Y = C + I + G + NX

Question

Quizplus · Accepted Answer

An open economy means that there are international transactions involved, which includes imports and exports. Therefore, the formula for an open economy's GDP adds net exports (NX) to the standard formula of Y = C + I + G. This gives us the correct formula of Y = C + I + G + NX.

What Is the Formula for an Open Economy's GDP