A domestic manufacturing firm produces $50 million worth of goods in a specific quarter. During that same quarter, it sells $40 million of these goods to domestic consumers and adds the remaining $10 million of unsold goods to its warehouse. Based on these transactions alone, how is the country's Gross Domestic Product (GDP) for the quarter directly affected?

An economy's total output is measured by the sum of its spending components. Match each economic transaction below with the primary component of expenditure it represents.

Calculating GDP from Expenditure Data

Rationale for Subtracting Imports in National Accounts

A government's decision to increase social security payments to retirees will directly increase the government spending component of that nation's Gross Domestic Product.

A U.S. household purchases a new car for $30,000 that was manufactured entirely in Germany. How does this transaction, by itself, affect the components of the U.S. Gross Domestic Product (GDP) as measured by the expenditure approach?

Evaluating the Impact of Imports on National Output

Reconciling National Accounts

A domestic corporation raises $20 million by issuing new shares of stock. It then uses $15 million of these funds to construct a new manufacturing plant. How do these two transactions, taken together, affect the nation's Gross Domestic Product (GDP) for the current period as measured by the expenditure approach?

A household sells its two-year-old car to another household for $15,000. To facilitate the sale, they use a dealership which charges a 5% commission fee. How does this entire set of transactions affect the current year's Gross Domestic Product (GDP) as measured by the expenditure approach?

Simplifying the Aggregate Demand Model for a Closed, Private Economy