What Is the Correct National Income Accounting Identity in an Open

question 93

Multiple Choice

What is the correct national income accounting identity in an open economy?

• A) Y = C + I + G
• B) Y = C + I + G + X + M
• C) Y = C + I + G - X + M
• D) Y = C + I + G + X - M

---

Definitions:

Income Statement

A financial statement that shows a company’s revenues and expenses over a specific period, culminating in the net income or loss for the period.

FIFO Inventory Method

An inventory valuation method where the cost of the items purchased first is the first to be recognized in determining cost of goods sold.

Earliest Inventory Purchase Costs

This refers to the cost associated with purchasing inventory items first in the order of acquisition, relevant in accounting methods like FIFO (First In, First Out).

Ending Inventory

The final value of goods available for sale at the end of an accounting period.