HK

Exercise

For each of the following state whether the activity is included in U.S. GDP. If part of GDP, state which of the expenditure categories it belongs (Investment, Durable goods consumption, nondurable goods consumption, consumption of services, government purchases of goods and services, exports and imports. If not part of GDP, explain why it is not part. Ignore any possible brokerage costs or sales commissions associated with the activity.

a. United airlines purchases a plane from Boeing

b. A household purchases milk from Jewel

c. A family pays tuition to a private school

d. The city of Chicago pays salaries to its police force

e. You purchase stock in Apple

f. The purchase of a new American made car

g. The purchase of a used textbook

h. You babysit your neighbor's kids and in return your neighbor fixes your car.

i. Unemployment benefits paid by the Federal government.

j. The sale of Boeing planes to a Canadian airline.

k. You travel on United airlines from Chicago to Hawaii.

l. The purchase of a new house

m. A coal company sells coal to an electric utililty.

n. You purchase clothing at Target that was made in Vietnam.

o. You live in a house built in 1983. Similar houses in the neighborhood rent for $2,000 a month.

State whether the following transactions are part of U.S. GDP, GNP, both or neither.

1. Wages paid to American workers working in a Toyota factory in the U.S.
2. Interest on a Japanese bond earned by an U.S. investor.
3. Profits earned by Ford on an automobile factory located in Brazil.