Which of the following equations sums up the components of Gross Domestic Product (GDP)?

• A. GDP = C + S + T
• B. GDP = C + I + G + NX
• C. GDP = P + Q + R + S
• D. GDP = M + X + G + I

Answer: (B)

Verified step by step guidance

1. Recall that Gross Domestic Product (GDP) measures the total market value of all final goods and services produced within a country in a given period.
2. Understand the main components of GDP, which are: Consumption (C), Investment (I), Government Spending (G), and Net Exports (NX), where Net Exports = Exports (X) - Imports (M).
3. Recognize that the standard GDP formula in macroeconomics is expressed as: \(GDP = C + I + G + NX\).
4. Analyze each given equation to see if it matches the components of GDP: the correct one should include Consumption, Investment, Government Spending, and Net Exports.
5. Conclude that the equation \(GDP = C + I + G + NX\) correctly sums up the components of GDP.