For each of the following transactions indicate whether US G

For each of the following transactions, indicate whether U.S. GDP rises, falls, or remains constant. In addition, indicate which, if any, of the four comp GDP are affected and the direction in which they change. If you don\'t mentiona component, I shall assume that you believe it is unaffected. a. Ford Motor Company builds a new car but it is not immediately sold. b. The U.S. Army buys 10,000 Uzi machine guns, which are made in Israel. c. Innis buys 100 shares of Google stock.

Solution

A increases. Because even though it is not sold it is added to inventory which means investment increases

B falls. The reason is net exports fall as imports rise. So it affects net exports

C Remains same. The reason is purchases of only stock market transactions are not included in Gdp