2. A Japanese consultancy firm operating in New York hires an American worker. They pay him $30, 000 in wages. The new worker's contribution is to bring a new client to the firm that buys consulting services for $40,000 (you may assume no other new cost was involved in this other than the wage). The client is a Canadian firm located in Toronto. Which of the following is correct? (a) consumption increases by $40, 000 and imports increase by $40, 000, so US GDP remains unchanged (b) national income increases by $30, 000 and factor payments from abroad increase by $30, 000, so US GDP remains unchanged (c) national income increases by $30,000 and factor payments to abroad increase by $10, 000, so US GDP increases by $40, 000 (d) consumption increases by $30, 000 and exports increase by $10, 000, so US GDP increases by $40, 000
2. A Japanese consultancy firm operating in New York hires an American worker. They pay him $30, 000 in wages. The new worker's contribution is to bring a new client to the firm that buys consulting services for $40,000 (you may assume no other new cost was involved in this other than the wage). The client is a Canadian firm located in Toronto. Which of the following is correct? (a) consumption increases by $40, 000 and imports increase by $40, 000, so US GDP remains unchanged (b) national income increases by $30, 000 and factor payments from abroad increase by $30, 000, so US GDP remains unchanged (c) national income increases by $30,000 and factor payments to abroad increase by $10, 000, so US GDP increases by $40, 000 (d) consumption increases by $30, 000 and exports increase by $10, 000, so US GDP increases by $40, 000
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
10
Transcribed Image Text:2. A Japanese consultancy firm operating in New York hires an American
worker. They pay him $30, 000 in wages. The new worker's contribution is
to bring a new client to the firm that buys consulting services for $40, 000
(you may assume no other new cost was involved in this other than the
wage). The client is a Canadian firm located in Toronto. Which of the
following is correct?
(a) consumption increases by $40, 000 and imports increase by $40, 000,
so US GDP remains unchanged
(b) national income increases by $30, 000 and factor payments from abroad
increase by $30, 000, so US GDP remains unchanged
(c) national income increases by $30,000 and factor payments to abroad
increase by $10, 000, so US GDP increases by $40,000
(d) consumption increases by $30,000 and exports increase by $10, 000,
so US GDP increases by $40, 000
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Recommended textbooks for you
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education