Question

How would each of the following transactions affect the GDP of the United States? a. The U.S. government pays $1 billion in salaries for government workers. GDP will(Click to select) b. The U.S. government pays $1 billion to Social Security recipients. GDP will (Click to select) c. The U.S. government pays a U.S. firm $1 billion for newly produced airplane parts. GDP will (Click to select) 4 ). d. The U.S. government pays $1 billion in interest to holders of U.S. government bonds. GDP will (Click to select) e. The U.S. government pays $1 billion to Saudi Arabia for crude oil to add to U.S. government-owned oil reserves. GDP will (Click to select)

Answer 1

a. GDP will increase.

The salary paid to the workers are counted as government expenditure and this will lead to an increase in GDP.

b. GDP will not change.

This is not considered while assesing GDP.

C. GDP will increase.

This will increase the income of the holders thus it increases the GDP.

d. GDP will not change.

It doesnot affect the GDP.