Question

Categories of expendituresGilberto and Juanita Ivanov live in Swarthmore, PA. Juanita's father, Lorenzo, lives in SwedenFor 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, investment, government purchases, exports, or imports.a. The state of Pennsylvania repaves highway PA 320, which goes through the center of Swarthmore.b. Lorenzo in Sweden orders a bottle of Vermont maple syrup from the producer's website.c. Gilberto's employer upgrades all of its computer systems using U.S.-made products.d. Juanita gets a new video camera made in the United States.e. Gilberto buys a sweater made in Guatemala

Answer 1

Answer:

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

The repaving of the highway is part of the U.S. GDP, and the category is government pruchases, or G, because it is the state that is spending the money on repaving the road.

B. Lorenzo in Sweden orders a bottle of Vermont maple syrup from the producer's website.

The bottle of maple syrup is part of the U.S. GDP, in the category of net exports, or XN. Exports are included in GDP because they correspond to goods that were produced domestically, and later sold abroad.

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

The U.S. made products to upgrade the computer are part of the U.S. GDP, in the category of consumption, or C. The products were made in the United States, and were purchased by a citizen, not by a government agency, for this reason, the transaction is classified as private consumption.

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

The camera is part of the U.S. GDP, in the category of consumption. This example is the same as above: the camera was made in the United States, and purchased by an American citizen, who lives in the United States.

E. Gilberto buys a sweater made in Guatemala.

The sweater is not part of U.S. GDP because it was not made domestically, it is an import, and imports are not part of GDP.