Due on Dec 12 at 11 PM EST 2. Accounting for trade in goods and services Suppose

Question

Due on Dec 12 at 11 PM EST 2. Accounting for trade in goods and services Suppose the following transactions occur during the current year 1. Brian orders 50 cases of beer from a Dutch distributor at a price of $40 per case. 2. A U.S. company sells 200 transistors to a Spanish company at $15.00 per transistor 3. Edison, a U.S. citizen, pays $1,500 for a laptop he orders from Microell (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 vear Hint: Be sure to enter a "O none of the transactions listed are induded in a given category and to enter a minus sign when the balance is negative. Amount (Dollars) Consumption Investment Government Purchases Imports Exports Net Exports Gross Domestic Product (GDP)

Explanation / Answer

Ans:

1) Brian order for 50 cases of beer considered under imports and consumption, amounting to $2000

2) Sale of transistors by U.S. company to spanish company is considered under Exports as $3000

3) Purchase of laptop by edison for $1500 is considered under investment

Table showing combined effect of transcations

GDP = Consumption + Investment + Net exports

Particulars Amount($) Consumption $2000 Investment $1500 Government Purchases 0 Imports $2000 Exports $3000 Net exports($3000 - $2000) $1000 Gross Domestic Product (GDP) = $2000 + $1500 +$1000 $4500

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