Use the following terms for this question: C = consumption
I = capital investment spending
G = government spending
X = exports of goods and services
M = imports of goods and services
BOP = balance of payments
GDP = gross domestic product
NPV = net present value
INF = inflation
R = real rate of return
The static equation for the nations GDP is:
A) GDP = C + I + G + (X + M ) × INF
B) GDP = C + I + G + X + M
C) GDP = C + I + G + X - M
D) GDP = C + I + X - M + R

Question

Quizplus · Accepted Answer

The static equation for calculating a country's GDP is GDP = C + I + G + (X - M). This equation shows that GDP is calculated by adding up a country's consumption (C), capital investment spending (I), and government spending (G), and then adding the difference between exports (X) and imports (M). This equation does not consider inflation or real rate of return, which are included in options A and D, and it does not multiply the trade balance by inflation, as in option B. Therefore, option C is the correct equation to calculate GDP.

Use the Following Terms for This Question: C = Consumption