Which of the following is the correct formula to calculate GDP using the expenditure approach?

The expenditure approach to calculating GDP is built around the idea that all economic activity can be seen as the sum of various types of expenditures. The correct formula identifies four key components: consumption, investment, government spending, exports, and imports.

The correct formula states that GDP equals consumption plus investment plus government spending plus the net of exports and imports. This means that while exports contribute positively to the GDP because they represent spending by foreign entities on domestic products, imports reduce the GDP calculation because they represent spending that does not contribute to domestic production.

In the formula, net exports (X - M) are crucial because they reflect the balance between what a country sells to the world and what it buys from it. If a country exports more than it imports, this indicates a positive contribution to GDP, whereas a net import situation suggests that domestic production is less than consumption due to external purchasing.

The other options either misstate the relationship among these components or incorrectly merge the figures in a way that does not accurately derive GDP based on expenditures. Thus, the formula that accurately encompasses all relevant expenditures while maintaining correct mathematical relationships is the correct choice.