Question

1. National income accounting

         For each example below, decide if it belongs in GDP and which category of GDP (C,I,G, or NX) it should be placed in. You may assume each actor is a resident of the U.S., unless otherwise noted.

         a.      Xerox builds a manufacturing plant in Taiwan

         b.      IBM purchases new software for all its workers to use

         c.      Jeff buys a new refrigerator (assembled in Kentucky) for                           $2000, which was built with parts worth $500 produced in                         Mexico

         d.      Amy begins saving for retirement by purchasing $1000                             worth of shares in a bond mutual fund

         e.      Toyoto builds a new auto assembly plant in Southern                                California using workers from Japan

         f.       Gerard pays his taxes

         g.      The defense department purchases new tanks, made in                           Texas

         h.      Rose buys an historic mansion

         i.       Tim buys $400 of last year’s shirts at an outlet mall

         j.       A local D.C. artist sells a $300 painting to a visitor from England.

         k.      Sarah bakes bread at home and serves it to her family.

         i.       Mexican seasonal workers pick tomatoes in Florida.

         m.     Amazon expands its delivery operations to London.

Answer 1