Question

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 Eleanor gets a new video camera made in the United States. Darnell's employer upgrades all of its computer systems using U.S.-made parts. The town of Swarthmore puts on a fireworks display for the Fourth of July. Darnell buys a bottle of Italian wine. Eleanor's father in Sweden orders a bottle of Vermont maple syrup from the producer's website.

Answer 1

The purchase of the video game would increase consumption spending

The computer system upgrade would increase the investment spending by businesses

The firework would increase government spending

Darnel imported the wine. So, imports would increase Also, consumption spending would increase

The purchase of the syrup would increase export. The syrup was bought by someone in Sweden

Step-by-step explanation:

Gross domestic product is the total sum of final goods and services produced in an economy within a given period which is usually a year

GDP calculated using the expenditure approach = Consumption spending by households + Investment spending by businesses + Government spending + Net export

Net export = exports – imports

When exports exceed import there is a trade deficit and when import exceeds import, there is a trade surplus.

Items not included in the calculation off GDP includes:

1. services not rendered to oneself

2. Activities not reported to the government

3. illegal activities

4. sale or purchase of used products

5. sale or purchase of intermediate products

The purchase of the video game would increase consumption spending

The computer system upgrade would increase the investment spending by businesses

The firework constitutes spending by government. government spending would increase

Darnel imported the wine. So, imports would increase Also, consumption spending would increase

The purchase of the syrup would increase export. The syrup was bought by someone in Sweden