The correct answer is C. Y = C + I + G + (X – M).
The national income is the total value of all final goods and services produced within a country’s borders in a given period of time. It is calculated by adding up the value of consumption, investment, government spending, and net exports.
Consumption is the total amount of goods and services that households buy in a given period of time. Investment is the total amount of money that businesses spend on new capital goods, such as factories and equipment, in a given period of time. Government spending is the total amount of money that the government spends on goods and services, such as education and healthcare, in a given period of time. Net exports are the difference between the value of a country’s exports and the value of its imports.
The equation Y = C + I + G + (X – M) is known as the national income identity. It states that the total value of all final goods and services produced in a country in a given period of time is equal to the sum of consumption, investment, government spending, and net exports.
Option A is incorrect because it does not include net exports. Option B is incorrect because it includes the negative of net exports. Option D is incorrect because it does not include government spending.