Question

Suppose the following transactions occur during the current year:

a. Kenji orders 40 bottles of wine from a French distributor at a price of $30 per bottle.
b. A U.S. company sells 200 spark plugs to a Korean company at $5.00 per spark plug.
c. Hubert, a U.S. citizen, pays $670 for a surfboard he orders from Greatwaves (a U.S. company).

Complete the following table by indicating how the combined effects of these transactions will be reflected in the U.S. national accounts for the current year.

Amount(Dollars)
Consumption
Investment
Government Purchases
Imports
Exports
Net Exports
Gross Domestic Product (GDP)

Answer 1

Answer:

Imports =  Bottle of wines

Imports = 40 * $30 = $1,200

Exports = Spark plugs

Exports = 200 * $5 = $1,000

Net Exports = Exports - Imports

Net Exports = $1,000 - $1,200

Net Exports = -$200

Consumption = Surfboard + Wines

Consumption = $670 + $1,200

Consumption = $1,870

Government purchase = $0

Investment = $0

GDP = C + I + G + NX

GDP = $1,870 + $0 + $0 + (-$200)

GDP = $1,870 + $0 + $0 - $200

GDP = $1,670