Question

Larry and Megan Smith live in Swarthmore, PA. Their son, Raphael, 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 (EX), or imports (IM). A. Larry buys a sweater made in Guatemala. B. Megan gets a new video camera made in the United States. C. Raphael buys a new set of tools to use in his plumbing business. D. Larry's employer assigns him to provide consulting services to an Australian firm that's opening a manufacturing facility in China. E. The state of Pennsylvania repaves highway PA 320, which goes through the center of Swarthmore.

Answer 1

A. Larry buys a sweater made in Guatemala. IMPORTS: decreases the GDP

B. Megan gets a new video camera made in the United States. CONSUMPTION: increases the GDP

C. Raphael buys a new set of tools to use in his plumbing business. INVESTMENT: increases the GDP

D. Larry's employer assigns him to provide consulting services to an Australian firm that's opening a manufacturing facility in China. EXPORTS: increases the GDP

E. The state of Pennsylvania repaves highway PA 320, which goes through the center of Swarthmore. GOVERNMENT PURCHASES: increases the GDP