Question

McDonalds buys a new fryer cooker for $1500

		counted as Investment
		counted as consumption, since it will be used in a consumer product
		not counted, intermediate product
		counted as transfer payment to McDonalds

You buy three shares of Google for $3,000

		counted as Investment
		not counted
		counted as consumption
		counted as transfer payment

You buy a brand new Kia car from a dealer in New Jersey for $15,000; the car was produced in South Korea

		added to GDP as an import
		not counted in the GDP
		counted as a consumer good
		counted as an international transfer

You get your hair cut at a barber shop for $100.

		counted as consumption (C)
		counted as a 'Service' in the Consumption category
		counted as an investment since you look so good
		both answers a and b are correct

A Japanese company buys 50 computers for their cloud services

		not counted since computers are being used abroad
		counted as business inventory
		counted as an export
		not counted

Answer 1

Ans. 1 = (A) Counted as Investment

The fryer cooker is a Capital Good. This would be used in the production process by McDonald's to produce finished goods like fries , burgers , etc.

Capital Goods are those which are generally used for longer period of time usually more than 1 year. So , Its a Long term investment.


Ans. 2 = (A) Counted as Investment

Investment is a item which is purchased by anyone for future gains. These are goods that are not consumed today but are used in the future to create wealth.


Ans. 3 = (A) Added to GDP as an import

GDP = C + I + G + NX

Since import is a negative part of NET EXPORTS (NX) which is included in GDP. So , It will be included in GDP as a import.


Ans. 4 = (A) Counted as a 'Service' in the Consumption category

Consumption = Goods consumed + Services

Hair cut at the barber shop is a service and it generates value in the economy.


Ans. 5 = (A) Counted as an export

If any good or services are sold to other country then it would be termed as Export.