Question

3. Categories of expenditures Larry and Megan Smith live in Swarthmore, PA. Megan's father, Raphael, 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 The state of Pennsylvania repaves highway PA 320, which goes through the center of Swarthmore. Larry's employer upgrades all of its computer systems using U.S.-made parts. Megan's father in Sweden orders a bottle of Vermont maple syrup from the producer's website. Larry buys a bottle of Italian wine. Megan gets a new refrigerator made in the United States.

Answer 1

Answer:

The state of Pennsylvania repaves highway PA 320 (G) Government purchase or expenditure

Larry's employer upgrades all of its computer systems using U.S.-made parts (I) investment

Megan's father in Sweden orders a bottle of Vermont maple syrup from the producer's website (X) exports

Larry buys a bottle of Italian wine. (I) imports

Megan gets a new refrigerator made in the United States. (C) consumption

Explanation:

GDP equals consumption + investment + government purchases and expenditures + exports - imports.

One of the GDP formula is the one based upon expenditures, which is based on the money spent by different groups that performs transactions in the economy.

GDP = C + G + I + NX

C = represents the consumption of consumer spending in goods and services.

G = represents the government expenditures, includin:

salaries of government employees

road construction/repair

public schools

military expenses.

I = represents the sum of a country’s investments spent on capital equipment, inventories, and housing.

NX = represent exports less imports.