In the Equation GDP = C + I + G

question 17

Multiple Choice

In the equation GDP = C + I + G + F,in which F equals net export spending (i.e.,total spending on exports minus total spending on imports) ,imports are subtracted from the other types of expenditures because:

• A)imports reduce national welfare.
• B)other countries do not import goods from the U.S.
• C)it represents a flow of expenditures out of the domestic economy to the rest of the world.
• D)the value of imports is difficult to determine due to the fact that they are frequently stated in terms of foreign currency.

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Definitions:

Continuous Flow

A production process where products move continuously through a series of operations, reducing wait times and inventory levels.