In each of the following cases, determine how much GDP and each of its components is affected (if at all).
A. Debbie spends $300 to buy her husband dinner at the finest restaurant in Boston.
B. Sarah spends $1200 on a new laptop to use in her publishing business. The laptop was built in China.
C. Jane spends $800 on a computer to use in her editing business. She got last year’s model on sale for a great price from a local manufacturer.
D. General Motors builds $500 million worth of cars, but consumers only buy $470 million worth of them.

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jepessoa jepessoa · Answer 1 · 2019-12-20T17:22:26+01:00

Answer:

A) The GDP increases by $300 since a dinner is considered a final service, it is part of consumption.

B) The GDP decreases by $1,200 since the laptop is imported from China, imports reduce net exports.

C) The GDP is not affected since the computer was manufactured last year.

D) The GDP increases by $500 since the cars are final products ($470 million are considered consumption and $30 million investment).

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