Question
1) In the fictional country of Terundia the local flower shop decides to expand its business and start home deliveries. To this end, at the
1) In the fictional country of Terundia the local flower shop decides to expand its business and start home deliveries. To this end, at the start of 2019 it purchases a mini-truck from a foreign manufacturer for a value of $20,000. They also purchase extra seeds from the local shop for $1,500 and fertilizer from a foreign distributor for $750. By the end of 2019 the residents of Terundia had bought additional flowers worth $7,200 and the residents of a neighboring country had bought flowers for a value of $10,300. By how much do the different expenditure components of GDP (Consumption (C), Investment (I), Government Expenditures (G), Exports (X) and Imports (M) increase in 2019 as a consequence of the flower shop expansion?
2) Volvo Personvagnar AB is an automobile manufacturer headquartered in Gothenburg, Sweden, and fully owned by Zhejiang Geely Holding Group of China. Currently, the official car of the King of Sweden is a stretched Volvo S80, which is manufactured in Chongqing, China. In the event the King decides to buy the same model for the Princess, how will Sweden's GDP and GNP (Gross National Product) change? Which of the components of GDP (from the expenditure approach) will change, if any?
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