Which of the following can be used to measure the Gross National product in an open economy?

A. C+I+G+(X+M)
B. C+I+G+X
C. C+I+G
D. C+I+G+(X-M)

Correct Answer:

Option D = C+I+G+(X-M)

Explanation

The formula to calculate the components of GNP is Y = C + I + G + X + Z. That stands for

GNP = Consumption + Investment + Government + X (net exports, or imports – exports) – Z (net income earned by domestic residents from overseas investments – net income earned by foreign residents from domestic investments)