Test Index

JAMB Economics 2018 Paper

Question : 14

Total: 85

In an open economy, the GNP is measured as_____________?

Solution:

Concept:

In an open economy, national output includes net exports, i.e. exports minus imports.

Explanation:

The expenditure approach for an open economy is:

Y = C + I + G + (X - M)

where

C

= consumption,

I

= investment,

G

= government spending,

X

= exports, and

M

= imports.

So GNP is measured as total spending on final goods and services, including net exports.

Answer:

Option A:

C + I + G + (X - M)

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