GDP=C+I+G+(X−M)\text{GDP} = C + I + G + (X - M)GDP=C+I+G+(X−M)
Where:
CCC: Consumption
III: Investment
GGG: Government spending
XXX: Exports
MMM: Imports
Why Imports Are Subtracted and Exports Are Added
Exports represent goods produced domestically and sold abroad, contributing to domestic production (added to GDP).
Imports are goods produced abroad and consumed domestically, reducing domestic production (subtracted from GDP).
Why the Answer is C
The formula directly supports adding exports and subtracting imports.
ICWIM Study Guide, Chapter on Economic Indicators: Explains the GDP formula and its components.
Macroeconomics Textbooks: Confirms the impact of imports and exports on GDP.
References
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