Question

Classify the transactions below as Consumption, Investment, Government Expenditures, or Net Exports.

a) You buy a new Ford Mustang automobile.
b) You buy 200 new shares of IBM computers in the stock market.
c) You buy an IBM computer.
d) General Motors buys a new IBM computer.
e) The government buys a new airplane for $25 million.
f) Purchases of military hardware by the US Army.
g) IBM builds a new factory.
h) IBM buys an old factory.
i) An American family buys a new house.
j) An American family buys an old house.

Answer 1

A. Consumption

B. Investment.

C. Consumption

D. Consumption

E. Government Expenditure

F. Government expenditure

G. Investment

H. Investment

I. Investment

J. Investment

Step-by-step explanation:

It should be understood that the meanings of the words used above must be understood, and these are written below.

An activity is regarded as consumption when it is done for use. The computers were bought to do some activities.

Investment are the things that we do today but will continue to generate money for so many years afterwards.

Government expenditures are the things that government use money to do or buy.

Therefore, the answers written above rightly arranged the activities accordingly.