ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -(X-M) in the above equation represents net exports. Net exports are the estimation of the total value of a country’s exports minus the total value of its imports. A positive net exports figure indicates a trade surplus.

Detailed explanation-2: -The formula for GDP is: GDP = C + I + G + (X-M). C is consumer spending, I is business investment, G is government spending, and (X-M) is net exports.

Detailed explanation-3: -Aggregate Expenditure Output Model Aggregate expenditures (AE) equal the total spending in the macroeconomy. They are usually represented by adding the four sectors of GDP: consumption (C), gross private domestic investment (I), government expenditures (G), and net exports (X-M).

Detailed explanation-4: -They participate in an active learning demonstration of the GDP expenditure equation [GDP = C + I + G + (X – M)] to understand the relationships among the variables and the effect of changes in aggregate spending on GDP. Special attention is given to the effect that imports have on GDP.

Detailed explanation-5: -When using the expenditures approach to calculating GDP the components are consumption, investment, government spending, exports, and imports.