\(\mathrm{GI} P=\mathrm{C}+\mathrm{I}+\mathrm{G}+\mathrm{X}_{\mathrm{n}}\). If \(\mathrm{X}_{\mathrm{n}}\) were not included, our GDP would be (LO5) a) higher b) about the same c) lower

Firstly, it is important to understand each of the components of the GDP calculation: - Consumption expenditure (C) is the total expenditure by households on goods and services over a specific time period. - Investment expenditure (I) includes business investments in equipment and the construction of new houses. - Government expenditure (G) includes spending by the government on goods and services, such as infrastructure, public services, and public employee salaries. - Net exports (Xn) account for the difference between what a country exports and what it imports. If a country exports more than it imports, Xn is positive, but if it imports more than it exports, Xn is negative.

If we remove net exports (\( X_n \)) from the equation, we effectively calculate the GDP based only on the domestic production and expenditure without considering the impact of international trade. This is sometimes referred to as Gross Domestic Product at Factor Cost or GDFC. The new formula becomes: \[ P = C + I + G \]

The impact of ignoring \( X_n \) in the GDP calculation depends on whether a country is a net exporter or a net importer. Net exports (\( X_n \)) can be positive, negative, or zero. If \( X_n \) is positive (exports more than it imports), the GDP would be lower without this number. If the \( X_n \) is negative (country imports more than it exports), the GDP without this number would actually be higher. Finally, if \( X_n \) is zero (exports equals imports), the GDP would be the same without net exports. So, the correct answer to the exercise depends on whether the country under consideration is a net exporter or a net importer. Given that the exercise does not specify the scenario, the most comprehensive answer would be explaining these possible outcomes.