The Income Identity Y = C + I + G

Multiple Choice

The income identity Y = C + I + G + X implicitly assumes that the left-hand variable Y is simultaneously real GDP, real output, and real income. It is an exact interpretation when

A) all nominal variables are converted into real variables by dividing by a price index.
B) nominal depreciation is subtracted from GDP before the value for Y is recorded.
C) all nominal variables are converted into real variables and an assumption that capital does not depreciate is imposed.
D) all nominal variables are converted into real variables and assumptions that set both real depreciation expense and indirect taxes equal to zero are imposed.
E) none of the above.