By how much does GDP rise in each of the fol- lowing scenarios? Explain. (a) A computer company buys parts from a local distributor for $1 million, assembles the parts, and sells the resulting computers for $2 million. (b) A real estate agent sells a house for $200,000 that the previous owners had bought 10 years earlier for $100,000. The agent earns a commission of $6,000. (c) During a recession, the government raises unemployment benefits by $100 million. (d) A new U. S. airline purchases and imports $50 million worth of airplanes from the European company Airbus.

a. GDP increases by $2 million. Only final good and services are included in GDP. the parts used in making the computer represents intermediate goods. Intermediate goods are not included in the calculation of GDP.

b. GDP would increase by $6000. Only goods produced in the current year are included in GDP. The house wasn't  built in the current year so it would not be included in GDP. So, only the agent's fees would be included

c. 0 Transfer payments are not included in GDP

d.0.  Imports would increases and net export would decrease. Also, business spending would increase. Taking these two effects together, there would be no change in GDP

Explanation:

Gross domestic product is the total sum of final goods and services produced in an economy within a given period which is usually a year

GDP calculated using the expenditure approach = Consumption spending by households + Investment spending by businesses + Government spending + Net export

Net export = exports imports

When exports exceed import there is a trade deficit and when import exceeds import, there is a trade surplus.

Items not included in the calculation off GDP includes:

services not rendered to oneself

Activities not reported to the government

illegal activities

sale or purchase of used products

sale or purchase of intermediate products

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