JAMB Economics 2014 Paper

Concept:In an open economy, the total output includes net exports, so the correct expenditure measure is $Y = C + I + G + (X - M)$.Explanation:The expenditure approach to measuring national product in an open economy adds all spending components.$C$ = consumption expenditure by households.$I$ = investment expenditure by firms.$G$ = government spending on goods and services.Since the economy trades with other countries, we add exports $(X)$ and subtract imports $(M)$.Therefore, the proper formula is:$$Y = C + I + G + (X - M)$$This gives the net contribution of foreign trade to national output.Among the options, this matches option D.Answer:$D$$$C + I + G + (X - M)$$