Question

A Texas household receives a Social Security check for $1500, which it uses to purchase a $40 pair of shoes made in Thailand by a Thai firm, a $1240 television made by a Korean firm in Korea, and $220 on groceries from a local store. As a result, U.S. GDP a. increases by $280. b. increases by $1500. c. increases by $40. d. increases by $220.

Answer 1

Answer: increases by $220.

Step-by-step explanation:

The gross domestic product simply means the value in terms of money of the goods that are produced by a particular economy.

Based on the information given in the question, we are told that the household purchase a $40 pair of shoes made in Thailand by a Thai firm, a $1240 television made by a Korean firm in Korea, and $220 on groceries from a local store.

We should note that the GDP will increase by $220 because the groceries were produced in the United States while the other purchase doesn't add to the GDP as they are from other countries.