Question

Determine whether each of the following transactions contributes to the calculation of GDP as total spending, then, identify the relevant component of GDP (C, I, G, or NX). Michelin sells tires to Nissan to install on their 2019 Sentras that are produced and sold in the United States. American consumers import $3.5 billion of woven apparel from Bangladesh. The U.S. government spent $523.1 billion on national defense. Entrepreneur and Shark Tank investor Barbara Corcoran purchases 15% of Cousins Maine Lobster food truck company for $55,000.

Answer 1

Answer:

Michelin sells tires to Nissan to install on their 2019 Sentras that are produced and sold in the United States.

• Not included in the GDP since tires are a component of new cars, they are not a final product.

American consumers import $3.5 billion of woven apparel from Bangladesh.

• Included in the GDP as imports, which reduce total net exports (NX).

The U.S. government spent $523.1 billion on national defense.

• Included in the GDP as government spending (G).

Entrepreneur and Shark Tank investor Barbara Corcoran purchases 15% of Cousins Maine Lobster food truck company for $55,000.

• Not included int he GDP since sale of stocks or ownership stakes at businesses are not considered final goods or services.