Question

Lorenzo and Neha Stewart live in Conshohocken, PA. Neha's father, Sam, lives in Sweden.

For each of the following transactions that occur in their lives, identify whether it is included in the calculation of U.S. GDP as part of consumption (C), investment (I), government purchases (G), exports (X), or imports (M). Check all that apply.

Transaction C I G X M
Neha's father in Sweden orders a bottle of Vermont maple syrup from the producer's website. ___ ___ ___ ___ ___
Neha gets a new video camera made in the United States. ___ ___ ___ ___ ___
Lorenzo's employer upgrades all of its computer systems using U.S.-made parts. ___ ___ ___ ___ ___
Neha buys a new BMW, which was assembled in Germany. ___ ___ ___ ___ ___
The Federal Aviation Administration expands the runways at Philadelphia International Airport, which is just a few miles from Lorenzo and Neha's house. ___ ___ ___ ___ ___

Answer 1

Each transaction is categorized based on the GDP component it correlates with: Vermont syrup exported is X, U.S.-made video camera is C, computer systems upgrade is I, imported BMW is M, and FAA airport expansion is G.

Step-by-step explanation:

When assessing the impact of transactions on the U.S. GDP, various economic activities are classified into different categories such as consumption (C), investment (I), government purchases (G), exports (X), and imports (M). Here's how the transactions mentioned fit into these categories:

• Neha's father in Sweden orders a bottle of Vermont maple syrup from the producer's website: X
• Neha gets a new video camera made in the United States: C
• Lorenzo's employer upgrades all of its computer systems using U.S.-made parts: I
• Neha buys a new BMW, which was assembled in Germany: M
• The Federal Aviation Administration expands the runways at Philadelphia International Airport: G

Each transaction is allocated to a category based on who is making the purchase and the origin of the goods or services. Goods and services produced within the U.S. and sold to domestic or foreign consumers contribute to U.S. GDP. Conversely, items produced outside the U.S. and purchased by U.S. consumers are considered imports and do not contribute to U.S. GDP but are rather subtracted from it.