Think of the expenditure approach for calculating GDP. In this approach, spending of firms, the government, individual households, and the rest of the world are added up using the formula:
GDP = C + I + G + (X-M)
What do X and M stand for, respectively?
A)Imports; exports
B)Exports; imports
C)Personal consumption; investment in new capital
D)Government spending; subsidy payments

Question

Quizplus · Accepted Answer

In the expenditure approach to calculating GDP, X and M stand for exports and imports, respectively.
Key Takeaway: The expenditure approach is one of two main methods for calculating GDP. Using the equation GDP = C + I + G + (X-M), the equation adds up personal household consumption (C), investment in new forms of capital (I), government spending (G), and exports minus imports (X-M) to obtain the GDP. The other approach to calculating GDP is the income approach.

Think of the Expenditure Approach for Calculating GDP