If C stands for consumption expenditure, I for investment, X for exports, and M for imports, then national income is?
Answer Details
National income is equal to the sum of all income earned by individuals and businesses in a country over a certain period.
In the given options, national income is represented by the equation C + I + X - M.
- C represents consumption expenditure by households and individuals.
- I represents investment expenditure by businesses.
- X represents exports, which is the total value of goods and services produced in a country and sold to other countries.
- M represents imports, which is the total value of goods and services produced in other countries and bought by consumers in the domestic country.
Subtracting imports from exports (X - M) gives the net exports, which represents the balance of trade. It is the difference between the value of exports and imports, and can be positive or negative depending on whether a country is exporting more or importing more.
Therefore, the correct equation for national income is C + I + X - M, which includes all the major components of a country's economy.