Question

After the terrorist attacks on September 11, 2001, governments within the United States raised expenditures to increase security at airports. These purchases of goods and services are a. not included in GDP since they do not represent production. b. not included in GDP since the government collects taxes to pay for them. c. included in GDP since government expenditures on goods and services are included in GDP.

Answer 1

Answer:

These purchases of goods and services are included in GDP since government expenditures on goods and services are included in GDP.

Explanation:

The equation used to calculate the GDP is:

GDP = C + I + G + (X – M)

GDP = consumption + investment + government expenditures + (exports – imports)

The G represents government consumption expenditure and gross investment. Governments spend money on equipment, infrastructure, and payroll.

As in this case in wich government raised expenditures to increase security at airports.