The Equation Representing the Final Demand Approach to Calculating GDP

question 101

Multiple Choice

The equation representing the final demand approach to calculating GDP is

• A)Y = C + I + X + IM.
• B)Y = C + I + G.
• C)Y = G + I + X − IM.
• D)Y = C+ I + G + (X − IM).

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Definitions:

Normal Good

A good for which demand increases as the income of consumers increases and decreases as the income of consumers decreases.

Price Elastic

Pertains to a measurement in economics of how responsive an economic variable's quantity is to a change in its price.

Total Budget

The complete amount of money allocated for a particular purpose, project, organization, or time period.

Cross Elasticity

Cross elasticity measures the responsiveness of the demand for one good to a change in the price of another good, indicating their substitutability or complementarity to consumers.