Question

Select the correction answer from the choices below. If an American student purchases a personal computer made by a Korean owned company located in California, what would happen to consumption and the GDP of the USA as a result

Answer 1

The consumption and GDP will increase.

Step-by-step explanation:

Consumption can be defined as the purchase of final goods and services with the motive to derive utility or satisfaction. Consumption expenditure is included in the GDP of an economy.

If an American student purchases a personal computer made by a company located in California, it will be recorded as consumption.

This will cause consumption to increase. Since consumption is included in GDP, the GDP will increase as well.