For each of the following scenarios, classify the type of spending (C, I, G, Xn), describe its impact on gross domestic product (increase, decrease, not impacted), and explain.

A. A new airplane purchased by United Parcel Service.

B. The tuition you pay during your first year of college.

C. The social security check your grandmother receives.

D. A new purchase of 50,000 shares of Time/Warner stock.

E. A new pair of tennis shoes made in China and purchased by an American shoe store.

Question

Business

Ciara Moran

1 August, 23:12

For each of the following scenarios, classify the type of spending (C, I, G, Xn), describe its impact on gross domestic product (increase, decrease, not impacted), and explain.

A. A new airplane purchased by United Parcel Service.

B. The tuition you pay during your first year of college.

C. The social security check your grandmother receives.

D. A new purchase of 50,000 shares of Time/Warner stock.

E. A new pair of tennis shoes made in China and purchased by an American shoe store.

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Answers (1)

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Hyrum · Answer 1

A. A new airplane purchased by United Parcel Service.

Investment (in fixed assets), GDP grows

B. The tuition you pay during your first year of college.

Consumption (of services), GDP grows

C. The social security check your grandmother receives.

Not included in GDP, social security checks are considered transfer payments.

D. A new purchase of 50,000 shares of Time/Warner stock.

Not included in GDP, only IPOs are included in GDP

E. A new pair of tennis shoes made in China and purchased by an American shoe store.

Import, GDP decreases since net exports decrease