Question

1.      The Aggregate Expenditures Approach to calculating GDP is: a.       C+I-G-(X-R) b.      C+I+G+ (X-M) c.       C+I+MB+...

1.      The Aggregate Expenditures Approach to calculating GDP is:

a.       C+I-G-(X-R)

b.      C+I+G+ (X-M)

c.       C+I+MB+ (X-M)

d.      b and c

Homework Answers

Answer #1

Answer is b.

C + I +G + ( X - M ) is the proper formula to calculate the GDP by the aggregate expenditures appraoch.

C stands for personal consumption expenditures, I stands for gross private investment, G stands for government expenditures and gross investment, X stands for exports and M is stands for imports and represents the purchase of foreign goods and services.

thus, the GDP under the expenditures approach is calculated using this proper formula.             

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