Question

3. Categories of expenditures Van and Amy Cho live in Swarthmore, PA. Their son, Carlos, owns his own plumbing business. For each of the following transactions that occur in their lives, identify whether it is included in the calculation of U.S. GDP as part of consumption (C), investment (I), government purchases (G), exports (X), or imports (M). Check all that apply. Transaction C I G X M Amy gets a new video camera made in the United States. The state of Pennsylvania repaves highway PA 320, which goes through the center of Swarthmore. Van buys a sweater made in Guatemala. Van's employer assigns him to provide consulting services to an Australian firm that's opening a manufacturing facility in China. Carlos buys a new set of tools to use in his plumbing business.

Answer 1

Amy gets a new video camera made in the United States - This is included in the calculation if U.S. GDP as consumption because he is using the product, that is, he is the end user of the product.

The state of Pennsylvania repaves highway PA 320, which goes through the center of Swarthmore - This is included in the calculation of U.S. GDP because Government investment is involved. It means government is investing for public infrastructure.

Van buys a sweater made in Guatemala - This is included in the calculation of U.S. GDP as this is a component of import.

Van's employer assigns him to provide consulting services to an Australian firm that's opening a manufacturing facility in China -

This is also included in the calculation of U.S. GDP because U.S. is exporting services to another country.

Carlos buys a new set of tools to use in his plumbing business - This is also included in the calculation because this is an investment which Carlos is making for his business.