Decide how each of the following transactions would directly affect Hong Kong GDP (unless otherwise specified). Determine
Question:
Decide how each of the following transactions would directly affect Hong Kong GDP (unless otherwise specified). Determine which expenditure component(s) would be affected, if any. If the transactions would not affect GDP, explain why.
- Responding to shortages of face masks, a firm paid US$150,000 to import a machine from India at the beginning of the year. During the year, it produced 36 million masks for sale at HK$1 a piece to local citizens1. Suppose due to increased competition in the market, 10 million masks remained unsold at the end of this year.
- The Metro purchased 20 robots, which are produced by a local biotechnology company - Avalon, to help clean its trains. Each robot costs HK$1 million.
The HK Government has spent about $8 billion for the procurement of COVID-19 vaccines from other countries in the year. The vaccination was provided to US citizens for free. The administration costs of the vaccination provision, such as recruiting medical staffs, was about $0.5 billion. However, with public concerns over safety of vaccination mounting, the take-up rate was low. Suppose eventually half of the vaccines were unused this year.
Consider Taiwan's GDP for this part. Taiwan exported approximately US$54 million worth of pineapples to China a year. This year, China stopped all Taiwanese pineapple imports for biosecurity reasons. The ban prompted Taiwanese government to launch a campaign on Twitter, calling on the local households to purchase their own pineapples. It was reported that local consumers made up the potential shortfall in sales by buying an entire year's worth of pineapple exports in just four days4. Suppose eventually Taiwan's citizens bought exactly US$54million worth of pineapples domestically in the year.