Would The purchase by a German resident in Germany of a ceil

Would \"The purchase by a German resident in Germany of a ceiling fan produced in Canada. \" be included in GDP? Explain why or why not and if applicabe, which expenditure category in which it is included

Solution

Yes, this transaction is included in GDP calculation. As the ceiling fan is a final good which is consumed in Germany but manufactured in Canada is counted as imports. So this particular expenditure is included under net exports where in the exports are deducted with imports to get a net balance on payments to be made to foreign country.

The formula for GDP = Consumption + Investment + government purchases + Net exports

Net exports = Exports-Imports