g The Council of Economic Advisors to the President of a country reported gross investment expenditure at $400,000 during a particular year. The group excluded from this valuation an amount of $50,000 spent by an existing domestic firm during the year. Mark, an economist, argued that this amount should have been included under the business fixed investment component of GDP. Which of the following, if true, would support Mark's argument? A. The firm stalled production temporarily to lower the value of its inventory stock by $50,000. B. The firm purchased new machinery worth $50,000 for its production facility during that year. C. The firm exported products worth $50,000 to a neighboring country. D. The firm sold off its existing machinery worth $50,000 and invested the proceeds in buying raw materials for production. E. The firm transferred machinery worth $50,000 from one of its closed facilities to one in operation.

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Business

Kendall Ortega

10 December, 05:34

g The Council of Economic Advisors to the President of a country reported gross investment expenditure at $400,000 during a particular year. The group excluded from this valuation an amount of $50,000 spent by an existing domestic firm during the year. Mark, an economist, argued that this amount should have been included under the business fixed investment component of GDP. Which of the following, if true, would support Mark's argument? A. The firm stalled production temporarily to lower the value of its inventory stock by $50,000. B. The firm purchased new machinery worth $50,000 for its production facility during that year. C. The firm exported products worth $50,000 to a neighboring country. D. The firm sold off its existing machinery worth $50,000 and invested the proceeds in buying raw materials for production. E. The firm transferred machinery worth $50,000 from one of its closed facilities to one in operation.

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Derick Mendez · Answer 1

The firm purchased new machinery worth $50,000 for its production facility during that year would support Mark's argument.

Explanation:

Gross Investment as calculated by national income and production, is part of the gross domestic product (GDP) (Represented by Variable I), given in the formula GDP = C + I + G + NX,

where C is consumption, G is government spending, and NX is net exports, given by the difference between the exports and imports, X - M.

So savings are all that is left with total consumption, public spending and consumer spending are reduced (i. e. I = GDP - C - G - NX ).