Identify the effect of each of the following circumstances on US GDP and on the components of GDP?

a. Ann purchases a Ford tractor to be used on the farm

b. Reed receives a social security check

c. Amit purchases a shirt which is made in India

d. The US Navy send their troops to work overseas.

Solutions

Expert Solution

GDP ( gross domestic product ) increases when their is production of good or consumption of domestic product .

A) Ann purchase a ford tractor to be used on the firm

Ann purchase a tractor this is a consumption of a good . This will increase the US GDP. Tractor is used for the production of goods in the farm , by this there will be an increase an production which also help to increase the US GDP. purchase of tractor will increase US GDP.

B) Reed received a social security check

Social security is not included while calculating US GDP . So this will doesn't effect the US GDP

C) Amit purchase a shirt made in India

Amit purchase a shirt which is made in India so this is a import good foreign country. This will reduce the US GDP. Purchase of this shirt will increase the India GDP.

D) The US Navy sending troops to overseas

When US sending its Navy to overseas it will reduce the GDP.

As Navy troops are paid by US but there is no production or security to the home country. This will benefit the overseas where troops are sent . This will reduce USGDP.

Rahul Sunny answered 1 year ago

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