Question

Categories of expenditures

Eric and Ginny Gaffney live in Swarthmore, PA. Ginny's father, Kenji, 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 (I), government purchases (G), exports (X), or imports (M). Check all that apply.
Transaction C I G X M
Eric's employer upgrades all of its computer systems using U.S.-made parts.
Ginny gets a new refrigerator made in the United States.
Ginny's father in Sweden orders a bottle of Vermont maple syrup from the producer's website.
The state of Pennsylvania repaves highway PA 320, which goes through the center of Swarthmore.
Eric buys a bottle of Italian wine.

Answer 1

Categories of expenditures

1. I

Eric's employer upgrades all of its computer systems using U.S.-made parts.

2. C

Ginny gets a new refrigerator made in the United States.

3. X

Ginny's father in Sweden orders a bottle of Vermont maple syrup from the producer's website.

4. G

The state of Pennsylvania repaves highway PA 320, which goes through the center of Swarthmore.

5. M

Eric buys a bottle of Italian wine.

Step-by-step explanation:

The US Gross Domestic Product (GDP) can be measured using the expenditure approach: Y = C + I + G + (X – M). This expenditure approach calculates GDP by evaluating the sum of all final goods and services purchased in the US economy. The components of the US GDP identified as “Y” in equation form include Consumption (C), Investment (I), Government Spending (G), and Net Exports (X – M) with X as exports and M as imports.