Question

Suppose the following transactions occur during the current year:

1.	Tim orders 40 cases of beer from a Dutch distributor at a price of $40 per case.
2.	A U.S. company sells 200 transistors to a Spanish company at $15.00 per transistor.
3.	Brian, a U.S. citizen, pays $1,100 for a computer he orders from Dellosoft (a U.S. company).

Complete the following table by indicating how the combined effects of these transactions will be reflected in the U.S. national accounts for the current year.

Hint: Be sure to enter a “0” if none of the transactions listed are included in a given category and to enter a minus sign when the balance is negative.

	Amount
	(Dollars)
Consumption
Investment
Government Purchases
Imports
Exports
Net Exports
Gross Domestic Product (GDP)

Answer 1

Answer- Consumption would be zero as there is no household purchase or personal purchases.

Investment will also be $1,100 because there has been a purchase of computer for the company which is considered capital in nature as it will be used for a long time and will help in generating profit. But no traces of residential investments or any inventory so total of Investment would be $1,100 only.

Government purchases will be zero as nothing is mentioned about government spending in the question above.

Imports will be $1,600 ( 40 cases x $40 per case ). Since the goods were bought from a foreign country it will be included in the imports.

Exports include goods sent or sold to other nations for sale. In the above question exports amount to $3,000 ( 200 Transistors x $15 per transistor ).

Net exports is the difference between exports and imports and here it will be $1,400 ( $3,000 - $1,600 ).

Thus, the GDP will be : Investment + Consumption + Government spending + Net exports.

So GDP = $2,500.