Categories of expenditures Gilberto and Juanita Jones live in Swarthmore, PA. Juanita's father, Lorenzo, 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).

a. Transaction C I G X M Gilberto buys a bottle of Italian wine.

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

c. Juanita gets a new video camera made in the United States.

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

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

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Business

Delilah Sanders

13 March, 10:57

Categories of expenditures Gilberto and Juanita Jones live in Swarthmore, PA. Juanita's father, Lorenzo, 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).

a. Transaction C I G X M Gilberto buys a bottle of Italian wine.

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

c. Juanita gets a new video camera made in the United States.

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

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

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Answers (1)

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Oprah · Answer 1

a. Import (M)

b. export (X)

c. export (X)

d. government purchases (G)

e. investment (I)

Explanation:

Gross Domestic Product (GDP) refers to the monetary value of all commodities that produced within the geographic boarder of a country during a given time period.

Therefore, geographic boarder of each item has to be considered when categorizing or including each item as part of consumption (C), investment (I), government purchases (G), exports (X), or imports (M) in the GDP calculation which can be stated as follows:

GDP = C + I + G + E - M

a. Gilberto buys a bottle of Italian wine

This an imports (M) that will have a reducing or negative effect on the GDP.

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

This an exports (X) that will have an increasing or positive effect on the GDP. It is an export because Juanita does not live in the within the geographical boundary and bought Vermont maple syrup which a US good. This an export from the US to Sweden.

c. Juanita gets a new video camera made in the United States.

This a consumption (C) that will have an increasing or positive effect on the GDP.

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

This a government purchases (G) as it is an expenditure by the state of Pennsylvania which is treated as a government.

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

This is an investment (I) expenditure by the employer since it used g U. S.-made parts.