Indicate what components of GDP (if any) each of the following transactions woul
ID: 1163071 • Letter: I
Question
Indicate what components of GDP (if any) each of the following transactions would affect. Check all that apply. Government Purchases Net Exports Transaction Uncle Paul pays a domestic contractor for renovating his home. Aunt Jane buys a new house from a local builder. You purchase a box of Belgium chocolate. Ford manufactures a Focus and sells it to Avis, the car rental company You pay a domestic plumber for fixing a leak in your bathroom. Ford sells a Mustang from its inventory to the Martinez family. California hires workers to repave Highway 101. The federal government sends your grandmother a Social Security check Consumption Investment 2Explanation / Answer
2. Payment to plumber is consumption expenditure
As paying to plumber is giving nothingkn return as monetary term and is thus classified as consumption.
1.home renovation is both consumption and investment
The first is because you want to improve your livingspace.
The second is becauseof the belief that you are making an investment that will increase the value of your home more than the cost of making changes.
3. Sales by ford is consumption expenditure
This is because we know that consumption is the value of domestic and foreign firms' sales in the domestic market to households thus excluding business investment.