National Income and product data are revised. What effects would the following r

Question

National Income and product data are revised. What effects would the following revisions have on consumption, investment, and GDP of US?

a. It is discovered that consumers bought $6 billion more furniture than previously thought. This furniture was manufactured in US.

b. It is discovered that consumers bought $6 billion more furniture than previously thought. This furniture was manufactured in Canada.

c. It is discovered that businesses bought $6 billion more furniture than previously thought. This furniture was manufactured in US.

d. It is discovered that businesses bought $6 billion more furniture than previously thought. This furniture was manufactured in Canada.

Explanation / Answer

Y=C+I where Y is GDP C is consumption and I is investment a) for 6 billion increase in consumption I remains same hence GDP increases by 6billion b)as 6 billion more furniture is consumed frm canada hence C increases by 6 billion I remains same GDP decrease by 6 billion as this C will go to other country c)for 6 billion increase in consumption I remains same hence GDP increases by 6billion d)as 6 billion more furniture is consumed frm canada hence C increases by 6 billion I remains same GDP decrease by 6 billion as this C will go to other country

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