The following expenditure equation is utilised to measure the economy: GDP = C + I + G + (X-M) Analyse each of the situations below and state which expenditures (or parts of the expenditures) would be counted under which of the four segments of the GDP expenditure equation, ie C, I, G or (X-M). a. The purchase of Australian made furniture by a business for use in its cafe. b. The purchase of foreign made furniture by a business for use in its café. c. The purchase of wood by a business to manufacture furniture which will then be sold to Australian and foreign customers.
The following expenditure equation is utilised to measure the economy:
Analyse each of the situations below and state which expenditures (or parts of the expenditures) would be counted under which of the four segments of the GDP expenditure equation, ie C, I, G or (X-M).
a. The purchase of Australian made furniture by a business for use in its cafe.
b. The purchase of foreign made furniture by a business for use in its café.
c. The purchase of wood by a business to manufacture furniture which will then be sold to Australian and foreign customers.
d. The purchase of 100 shares in ANZ Bank through a stockbroker.
e. Purchase of a 10-year-old foreign-made second-hand car from a Car Sales business in Parramatta, NSW.
f. A pension paid by the Australian Government to an old age pensioner.
g. You babysit for your nieces and nephews so your sister and her husband can go out for dinner.
As it is not mentioned that which part is to be answered, so answer of first three parts are given.
GDP = C + I + G + (X - M)
C = Consumption
I = Investment
G = Governement Expenditure
(X - M) = Exports - Imports
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