The Income Identity Y = C + I + G

question 29

Multiple Choice

The income identity Y = C + I + G + X implicitly assumes that the left-hand variable Y is simultaneously real GDP, real output, and real income. It is an exact interpretation when

• A) all nominal variables are converted into real variables by dividing by a price index.
• B) nominal depreciation is subtracted from GDP before the value for Y is recorded.
• C) all nominal variables are converted into real variables and an assumption that capital does not depreciate is imposed.
• D) all nominal variables are converted into real variables and assumptions that set both real depreciation expense and indirect taxes equal to zero are imposed.
• E) none of the above.

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Definitions:

Mental Functions

Cognitive functions and processes related to the mind, including perception, thinking, reasoning, and remembering.

Visual Acuity

The clarity or sharpness of vision, typically measured by the ability to discern letters or numbers at a standardized distance.

Positive Aging

The process of maintaining a positive outlook and well-being while navigating the natural aging process.

Physical Functioning

The ability to perform tasks and activities that require physical capability, including daily living activities and physical exercise.