The Equation That Breaks GDP Down by the Four Sources

question 196

Multiple Choice

The equation that breaks GDP down by the four sources of aggregate spending is:

• A) GDP = C + I + G + X + IM.
• B) GDP = C + I + G - X - IM.
• C) GDP = C - I - G - X + IM.
• D) GDP = C + I + G + X - IM.

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Definitions:

Reserve Price

A reserve price is the minimum price a seller is willing to accept for an item at auction; if bids do not reach this price, the item is not sold.

Private Values

A situation in auctions where the value of an item is known only to the bidder, not affecting the valuation of the item by other bidders.

Dutch Auction

An auction mechanism where the price starts high and decreases until a bidder accepts the price, securing the sale.

Rational Bidders

Individuals who participate in auctions or bidding processes and make decisions based on maximizing their utility.