Which Equation Will Always Represent GDP in an Open Economy

question 195

Multiple Choice

Which equation will always represent GDP in an open economy?

• A) S = I - G
• B) I = Y - C + G
• C) Y = C + I + G
• D) Y = C + I + G + NX

---

Definitions:

Interest Tax Shield

The reduction in income taxes that results from taking a deductible charge, such as interest on debt, reducing taxable income.

Tax

Compulsory financial charge or some other type of levy imposed upon a taxpayer by a governmental organization in order to fund government spending and various public expenditures.

Capital Structure

The mix of different forms of external funds and equity used by a firm to finance its overall operations and growth.

Debt-Equity Ratio

This metric calculates the relative use of debt and shareholders' equity in financing assets for a company.