Accounting for trade in goods and services Suppose the following transactions oc
ID: 1196737 • Letter: A
Question
Accounting for trade in goods and services Suppose the following transactions occur during the current year:
1. Lorenzo, a liquor store owner in the United States, orders 50 cases of beer from a Dutch distributor at a price of $40.00 per case.
2. A U.S. company sells 200 transistors to a Spanish company at $15.00 per transistor.
3. Sam, a U.S. citizen, pays $1,500 for a laptop he orders from Microell (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: Remember to enter a minus sign when the balance is negative.
Amount (Dollars)
Imports ____________
Exports ____________
Domestic Spending ________________
Net Exports _____________
Gross Domestic Product (GDP)_____________
Explanation / Answer
Imports = $2,000 [= Lorenzo importing 50 cases of Dutch beer at $20 per case]
Exports = $3,000 [= US company selling 200 units to Spanish company at $15]
Domestic spending = $1,500 [= Sam buying Dell computer]
Net exports = $1,000 [= Exports - Imports]
GDP = $2,500 [= Domestic spending + Net exports = $1,500 + $1,000]