Question

Manuel and Poornima White live in Swarthmore, PA. Poornima's father, Shen, lives in Sweden. For each of the following transactions, identify whether it is included in the calculation of U.S. GDP as part of consumption (C), investment spending (I), government purchases (G), exports (X), or imports (IM).
a. A product’s inclusion in one category does not necessarily imply that it is excluded from other categories.
b. The Federal Aviation Administration expands the runways at Philadelphia International Airport, which is just a few miles from Manuel and Poornima's house.
c. Poornima buys a new BMW, which was assembled in Germany.
d. Shen in Sweden orders a bottle of Vermont maple syrup from the producer's website.
e. Manuel's employer upgrades all of its computer systems using U.S.-made parts.
f. Poornima gets a new video camera that was made in the United States.

Answer 1

Answer:

a. The Federal Aviation Administration expands the runways at Philadelphia International Airport, which is just a few miles from Manuel and Poornima's house.

Identification: Government spending. This is the spending done by government in buying goods and services

b. Poornima buys a new BMW, which was assembled in Germany.

Identification: Imports. These are purchases by domestic consumers from foreign countries

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

Identification: Exports. These are purchases by foreign consumers from home countries

d. Manuel's employer upgrades all of its computer systems using U.S.-made parts.

Identification: Investment. It is a part of GDP if made in accumulation of capital and inventory

e. Poornima gets a new video camera that was made in the United States.

Identification: Consumption. This includes consumer's spending on durables and non-durable produced domestically.