Question

. Which of the following is true for a two sector closed economy?
Y=C+I
Y =C +I +G
Y=C+ I +G +NX
Y= C + I +G
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Answer 1

Answer:

Y=C+I+G+NX

Explanation:

yes it is true

Answer 2

Answer:

For a two-sector closed economy, Y= C+ I+ G+ NX is true always.

Explanation:

Concept of two-sector model:
In the basic two-sector circular-flow model, money flows from the households to the firms in the form of consumer expenditure in exchange for goods and services produced by the firm, then flows back from the firms to the households in form of factor payments.

Measurement of national income:

In a two-sector model, for the calculation of national income, following components are taken into consideration:

1) Consumption Expenditure (C)
2) Private Domestic Investment (I)
3) Government Consumption and Investment Expenditure (G)
4) Net Exports (NX)

Thus, Y= C+ I+ G+ NX.