A Bozeman,Montana,household receives a Social Security check for $800,which it uses to purchase a $599 television made in Korea by a Korean firm,as well as pay a local mechanic $191 to fix the family car.The household spends the remaining $10 on ice cream from Town and Country.As a result,U.S.GDP ________.
A) does not change
B) increases by $201
C) increases by $800
D) increases by $1,001

Question

Quizplus · Accepted Answer

U.S. GDP increases by $201 because the $191 spent on the local mechanic and the $10 spent on ice cream are domestic expenditures, contributing to GDP. The $599 spent on the Korean television does not contribute to U.S. GDP as it is an import.

A Bozeman,Montana,household Receives a Social Security Check for $800,which It