QUESTION A manufacturer located in Japan produces cars and s

QUESTION A manufacturer located in Japan produces cars and sells them to a businessman in Long Island for $2 million. The businessman pays $200,000 in salaries and $50,000 for renting a location out of which he sells the cars to the public. His total revenue is $3 million. With the exception of the Japanese manufacturer, everyone else involved in these transactions is a US national. Which of the following is correct? US Net Factor Payments to Abroad increase by $2 million US National income has increases by $250,000 US imports increase by $2 million and US National income increases by $1 million Value added and GDP in the US both increase by $750,000

Solution

Ans usa imports rise by 2 million paid to Japanese manufacturer and usa nation income rises by 3-2 million=1 million