Question

Using the expenditure approach to calculate current GDP, select the proper classification for each of the following transactions: 17 a. Nissan produces a car at its Tennessee plant in December, but does not intend to sell it until after the end of the year. Investment b. An auto parts maker buys an idle textile plant in North Carolina with the intent of converting it to a distribution center. Not counted points C. The U.S. Army rents a warehouse to store surplus equipment. Government purchases eBook References d. Boeing buys some new machinery for its assembly plant in South Carolina. (Click to select) e. A state employees' pension fund in California buys $10 million in corporate bonds. (Click to select) f. A local bakery buys 500 pounds of flour to make bread. (Click to select) g. A doctor buys a painting to hang in his office waiting area from an artist on Etsy. (Click to select) h. A family rents a beach house for a week's vacation. (Click to select) i. A retiree in Chicago receives a Social Security check from the U.S. Treasury. (Click to select)

Answer 1

A - Not counted (as it is not sold hence final value of output cannot be obtained)

B - Investment

C - Government expenditure

D - Investment

E - Not counted

F - Not counter (intermediate good)

G - Consumption expenditure

H - Consumption expenditure

I - Government expenditure