Question

Although GDP is a reasonably good measure of a nation's output, it does not necessarily include all transactions and production for that nation. Which of the following scenarios are either not accounted for or measured inaccurately by either the income or the expenditure methods of calculating GDP for the United States? Check all that apply The loss of enjoyment people incur when scenic land is converted to commercial use The value of babysitting services, when the babysitter is paid in cash and the transaction isnt reported to the government Expenditures on federal highways The variety of goods available to consumers When a U.S. company purchases and imports automotive parts from Canada to use to build cars within the United States, this purchase increases the component of GDP while also net exports by the same amount. Therefore, the purchase of automotive parts from Canada causes in US GDP

When a U.S. company purchases and imports automotive parts from Canada to use to build cars within the United States, this purchase increases the ______ (government puchases, investment or consumption)

Component of GDP while also ______ ( increasing or decreasing)

Therefore, the purchase of automotive parts from Canada causes ____ (no overall change, an overall increase or an overall decrease)

Answer 1

GDP is the total value of final goods and services produced in a given year within a country's border.

1. Is not included as it does not have economic value.

2. Since the services are paid in cash and not reported, this transaction is excluded from GDP.

3. Government spending.

4. Excluded as it does not have economic value.

When a U.S. company purchases and imports automotive parts from Canada to use to build cars within the United States, this purchase increases the (investment) (government purchases, investment or consumption)

Component of GDP while also (decreasing)( increasing or decreasing)

Therefore, the purchase of automotive parts from Canada causes no overall change (no overall change, an overall increase or an overall decrease).

It is an investment because it increases the business investment and at the same time increases imports, thus there is no overall change in GDP. Net exports is exports minus imports.