Question

Match A, B, C and D to whether they describe a consumption, investment, or government expenditure or are not included in GDP:

A. Pat purchases a 1965 Corvette sports car
B. Clara subscribes to her favorite magazine
C. The city of Magnolia purchases new pumps for their water treatment plant
D. 2 Brothers Bakery buys a new wood oven
1. Consumption
2. Not included in GDP
3. Investment
4. Government spending

Answer 1

Activities A (used car purchase), B (magazine subscription), C (city's purchase for water treatment) and D (bakery's purchase of a new oven) are categorized respectively as not included in GDP, consumption, government expenditure, and investment.

Step-by-step explanation:

To categorize each activity as either consumption, investment, government expenditure, or not included in GDP, let's consider each scenario:

1. A. Pat purchases a 1965 Corvette sports car – This would be considered consumption, but since it's a used car, it does not contribute to this year's GDP.
2. B. Clara subscribes to her favorite magazine – This is consumption and is included in GDP.
3. C. The city of Magnolia purchases new pumps for their water treatment plant – This is a government expenditure and included in GDP.
4. D. 2 Brothers Bakery buys a new wood oven – This would be considered a business investment and is included in GDP.

Thus, we can match:

• A - 2. Not included in GDP
• B - 1. Consumption
• C - 4. Government spending
• D - 3. Investment