Economics: The Basics 1st Edition by Mike Mandel

Exercise 1

In 2006 the federal government spent roughly $30 billion on the Central Intelligence Agency (the exact amount is classified). In which category of GDP does each of the following government expenditures belong, assuming that all purchases take place in the U.S.? If any do not belong in GDP, explain why.
a) Purchases of miniature cameras for use in foreign countries.
b) Purchases of Diet Coke for the CIA cafeteria.
c) The purchase of a new cell phone for the head of the CIA.
d) Salaries for undercover agents who are working out of CIA headquarters.