actionstakeQuiz&quiz-probGuid-Q4PLCOA8010100000039d6d9900; 50000&ctx;=bba M McGr

Question

actionstakeQuiz&quiz-probGuid-Q4PLCOA8010100000039d6d9900; 50000&ctx;=bba M McGraw- Luc sakai : My work CengageMail-kcrespo@luc.e.. e Home l Chegg.com f Hill Connec 2. Accounting for trade in goods and services Suppose the following transactions occur during the current year: 1. Dmitri orders 50 bottles of wine from a French distributor at a price of $30 per bottle. 2. A U.S. company sells 200 spark plugs to a Korean company at $5.00 per spark plug. 3. Jake, a U.S. citizen, pays $1,100 for a computer he orders from Dellosoft (a U.S. company). Complete the following table by indicating how the combined effects of these transactions will be reflected ir year Hint: Be sure to enter a O" if none of the transactions listed are included in a given category and to enter a

Explanation / Answer

Transaction 1

Musashi orders 50 bottles of wine from a French distributor at a price of $30 per bottle.

In this transaction, good is being purchased from a foriegn seller. So, it will be considered as imports.

Imports are stated with negative sign.

So, import category will have value of (50 * $30) -$1,500.

Transaction 2

A U.S. company sells 200 spark plugs to a Korean company at $500 per spark plug.

In this transaction, goods are being sold by a domestic producer to foriegn company. So, it will be considered as exports.

Exports are positive item.

So, export category will have value of (200 * $5) $1,000.

Transaction 3

Sean, a U.S. citizen, pays $1,100 for a computer he orders from Dellosoft (a U.S. company)

In this transaction, domestic consumer is purchasing good from domestic producer. So, it is a consumption item.

Consumption are positive item.

So, consumption category will have value of $1,100.

Following is the complete table -

Amount Consumption (C) $1,100 Investment (I) 0 Government Purchases (G) 0 Imports (I) -$1,500 Exports (X) $1,000 Net Exports (NX = X - I) -$500 GDP (C + I + G + NX) $600

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