Questions: Total spending in the economy is calculated as:
C+I+G+(X-M).
Y-C-I.
C+I+G+(M-X).
Y-I-G-N X
Transcript text: Total spending in the economy is calculated as:
$C+I+G+(X-M)$.
$Y-C-I$.
$C+I+G+(M-X)$.
$Y-I-G-N X$
Solution
The answer is the first one: $C+I+G+(X-M)$.
Explanation for each option:
$C+I+G+(X-M)$: This is the correct formula for calculating total spending in an economy, also known as the Gross Domestic Product (GDP) using the expenditure approach. Here, $C$ stands for consumption, $I$ for investment, $G$ for government spending, $X$ for exports, and $M$ for imports. The term $(X-M)$ represents net exports.
$Y-C-I$: This formula does not represent total spending in the economy. Instead, it could be interpreted as disposable income minus consumption and investment, which does not align with the standard GDP calculation.
$C+I+G+(M-X)$: This formula incorrectly calculates net exports as $(M-X)$, which would subtract exports and add imports, leading to an incorrect measure of total spending.
$Y-I-G-N X$: This formula is not a standard representation of total spending in the economy. It seems to mix different components without following the correct GDP calculation method.
In summary, the correct formula for total spending in the economy is $C+I+G+(X-M)$.