3) Consider the following activities taking place in the United States. For each activity, indicate whether...

3) Consider the following activities taking place in the United States. For each activity, indicate whether or not it should be included in U.S. GDP. If you determine that the activity would add to U.S. GDP. then indicate which category of Final Demand it should be in. (12 points) a) A college student spends $75 to buy a new textbook from the bookstore. b) Your parents pay your tuition bill at your university in the U.S. c) An iPhone manufactured in Seattle. Washington by Apple remains unsold at the end of the year. d) An unemployed worker receives an unemployment compensation check from the U.S. government. e) Henry, who owns a construction company in Florida. buys tools produced in Germany for his company. f) The U.S. government hired 500 more engineers to design a wall between the U.S. and Mexico.

Solutions

Expert Solution

A) A college student spends $75 to buy a new textbook is included in the U.S GDP (considering the transaction takes place in the U.S), as Consumption spending increases by $75.

B) It is included in the GDP. Tuition fees fall under the 'consumption' category of the US GDP.

C) GDP measures value of all final goods and services produced within an economy in a given time period. Unsold iPhone is included in the GDP, as it is being bought by the seller, as inventory, which falls under the ' investment' category of the GDP.

D) Unemployment compensation are not included in the GDP because they are not payment for the final goods and services, they don't represent a form of final demand or GDP.

E) it is included in GDP and the spending by Henry falls under the 'import' category of the GDP (as he is importing tools from Germany).

F) it is included in the GDP and falls under 'government spending' category of the GDP.

Rahul Sunny answered 8 months ago

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