Question

Hubert and Kate Juarez live in Swarthmore, PA. Kate's father, Manuel, 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 (1), government purchases (G), exports (X), or imports (M).

Check all that apply.
С 1 G х M
Transaction
Hubert buys a bottle of Italian wine.
Kate's father in Sweden orders a bottle of Vermont maple syrup from the producer's website.
Hubert's employer upgrades all of its computer systems using U.S..made parts.
The state of Pennsylvania repaves highway PA 320, which goes through the center of Swarthmore.
Kate gets a new video camera made in the United States

Answer 1

The transactions are categorized as import (M) for the Italian wine, export (X) for the Vermont maple syrup, investment (I) for the computer systems upgrade, government purchase (G) for the highway repaving, and consumption (C) for the video camera made in the U.S.

Step-by-step explanation:

Gross Domestic Product (GDP) measures the economic activity within a country, and it includes consumer spending (consumption), business spending (investment), government spending on goods and services, and spending on net exports, which include exports (X) minus imports (M). For Hubert and Kate’s transactions, here's how they would be categorized:

• Hubert buys a bottle of Italian wine: M (Import)
• Kate's father in Sweden orders a bottle of Vermont maple syrup from the producer's website: X (Export)
• Hubert's employer upgrades all of its computer systems using U.S.-made parts: I (Investment)
• The state of Pennsylvania repaves highway PA 320, which goes through the center of Swarthmore: G (Government Purchase)
• Kate gets a new video camera made in the United States: C (Consumption)

Each of these transactions contributes differently to the U.S. GDP, reflecting domestic and international economic activity.