Question

Edison and Hilary Garcia live in Swarthmore, PA. Their son, Kevin, owns his own plumbing business. 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
Hilary gets a new video camera made in the United States.
Kevin buys a new set of tools to use in his plumbing business.
The state of Pennsylvania repaves highway PA 320, which goes
through the center of Swarthmore.
Edison buys a sweater made in Guatemala.
Edison's employer assigns him to provide consulting services to
an Australian firm that's opening a manufacturing facility in China.

Answer 1

Hilary gets a new video camera made in the United States. ⇒ Consumption .

It is bought for personal use in the United States so falls under the consumption of the U.S.

Kevin buys a new set of tools to use in his plumbing business. ⇒ Investment.

This is investment because it was bought to improve the reduction capacity of the business.

The state of Pennsylvania repaves highway PA 320, which goes through the center of Swarthmore. ⇒ Government Purchases (G).

The state of Pennsylvania paid for this so it is government expenditure.

Edison buys a sweater made in Guatemala. ⇒ Imports (M).

The sweater was imported into the U.S. from Guatemala so falls under imports.

Edison's employer assigns him to provide consulting services to an Australian firm that's opening a manufacturing facility in China. ⇒ Exports.

Edison's skills are being sent to Australia and China indirectly so they represent exports as they are being sent out of the country.