Question

A purchase of a French bottle of wine by a resident of Honduras would be considered an ____ when counting GDP in Honduras. As a result, this purchase would be ____ Honduran GDP. A purchase of a box of cigars made in Honduras and sold in Canada would be considered an ____ for Honduran GDP, which would be ____ Honduran GDP.

Answer 1

Answer:

import, subtract. export, added

Explanation:

The GDP equation is given by  GDP = C + I + G + (X – M) where C is consumption, I investment, G is government expenditures and M are imports.

Since the bottle of wine was produced in France it had to be imported to Honduras to be consumed, imports enters the GDP equation with a minus sign. This implies imports are subtracted from the GDP equation. For a box of Honduras cigars to be consumed in Canada they had to be exported there, so these are counted as exports with enter the GDP equation with a plus sign. So exports are added.