Ace has always been a top student, so it was no surprise he won a $1,500 scholarship from the company where he worked summers to help with college expenses. Ace decides to spend his scholarship money on a new Apple MacBook. How will GDP be affected by Ace's recent purchases?
A) Consumption will go up by $1,500, because a computer is a durable good.
B) Investment will go up by $1,500, because a computer is a durable good.
C) GDP will not be affected, since Ace acquired the computer with scholarship money.
D) Consumption will go up by $1,500, because a computer is a nondurable good.

Question

Quizplus · Accepted Answer

Consumption will increase by $1,500 because a computer is considered a durable good, and purchases of durable goods are included in the consumption component of GDP.

Ace Has Always Been a Top Student, So It Was