Principles of Macroeconomics 7th Edition

Published by South-Western College
ISBN 10: 1-28516-591-8
ISBN 13: 978-1-28516-591-2

Chapter 10 - Measuring a Nation's Income - Quick Check Multiple Choice - Page 215: 3

Answer

d. The federal government sends a Social Security check to your grandmother

Work Step by Step

In (a) Air France buys an aeroplane produced in the US which accounts for in GDP as consumption In (b) General motor builds a new auto factory in North Carolina which is accounted for in GDP as Investment In (c) The City of New York pays a salary to a policeman for the services rendered by him to the government which is accounted for in the government spending In (d) The transfer payment made by the federal government to your grandmother is not in exchange for a good or service rendered by your grandmother in the current year. Hence it is not accounted for in the GDP.
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