For an Open Economy, the Equation Y = C

question 33

Multiple Choice

For an open economy, the equation Y = C + I + G + NX is an identity. If we define national saving, S, as the total income in the economy that is left after paying for consumption and government purchases, then for an open economy, it is true that

• A)S = I.
• B)S = 0.
• C)I = S + NX.
• D)S = I + NX.

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Definitions:

Spending Variance

The difference between the actual amount spent and the budgeted amount for a cost or expense over a particular period.

Budgeted Overhead

The estimated cost of overhead expenses planned for a specific period, including items such as utilities, rent, and indirect labor.

Applied Fixed Overhead

The portion of fixed overhead costs allocated to individual units of production based on a predetermined rate.

Machine Hours

A measure of the amount of time a machine is in operation, used for allocating costs in manufacturing.