In the Flow Diagram Representing an Open Economy, Which of the Following

question 12

Multiple Choice

In the flow diagram representing an open economy, which of the following is true?

• A) GNE plus the trade balance (TB) are equal to GDP (total domestic production).
• B) GNE are always less than GDP.
• C) GDP rises as GNI rises.
• D) GNE plus imports are equal to GDP.

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Definitions:

GDP Price Index

A measure that tracks changes in the prices of goods and services included in the Gross Domestic Product, allowing for inflation-adjusted economic assessments.

Nominal Gross Domestic Product

The measure of a country's overall economic output at current market prices, without adjusting for inflation or deflation.

Real Gross Domestic Product

Measures the value of all final goods and services produced within a country's borders in a given time period, adjusted for inflation, reflecting the actual productivity of an economy.

GDP Price Index

An economic metric that measures the changes in prices of all goods and services included in Gross Domestic Product.