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Explain which expenditure category of GDP changes and the direction of the change that results for each transaction described. a. A domestic business purchases a domestically produced computer to use in a business office. b. A domestic business produces a computer that is sold to a foreign company. c. The federal government purchases a domestically produced computer to use in a court house. d. A domestic household purchases a domestically produced computer to use in a home. e. A domestic household purchases a computer produced in a foreign country to use in a home.

Respuesta :

Answer:

Investment spending increases

b. Net export increases

c. Government spending increases

d. consumption spending increases

e. consumption spending increases

net export decreases

Explanation:

Gross domestic product is the total sum of final goods and services produced in an economy within a given period which is usually a year

GDP calculated using the expenditure approach = Consumption spending by households + Investment spending by businesses + Government spending + Net export

Net export = exports – imports

When exports exceed import there is a trade deficit and when import exceeds import, there is a trade surplus.  

A domestic business purchases a domestically produced computer to use in a business office increases business inventory.

The purchase of a computer by a foreign company increases export. export is a positive function of net export, so net export increases

The government's purchase increases government spending

The purchase of a computer is a durable purchase by households. This increases consumption spending

Also, the purchase of a computer from a foreign country is an import Import is a negative function of net export. so net export reduces

The financial value of all the welfare and commodities manufactured in a country during a definite period is called gross domestic product (GDP).

The answers are:

a. A domestic business purchases a domestically produced computer to use in a business office: Investment spending rises

  • It raises the business inventory as they are buying the goods.

b. A domestic business produces a computer that is sold to a foreign company: Net export raises.

  • Exportation is a positive determinant in GDP and the acquisition of domestically manufactured goods globally will raise the GDP.

c. The federal government purchases a domestically produced computer to use in a courthouse: Government spending rises.

  • Buying was done by the government so that their spending will raise.

d. A domestic household purchases a domestically produced computer to use in a home: increment in consumption spending.

  • The possession of the system by a household will raise its spending.

e. A domestic household purchases a computer produced in a foreign country to use in a home: consumption spending increases and net export decreases.

  • The buying of systems from a foreign country will raise the imports and spending hence reducing the export.

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