Identify the immediate effect of each of the following events on U.S. GDP and its components
a. James receives a Social Security check.
b. John buys an Italian sports car.
c. Henry buys domestically produced tools for his construction company.
a. Since this is a transfer payment, there is no change to GDP or to any of its components.
b. Consumption and imports will rise and cancel each other out so that there is no change in U.S. GDP.
c. This increases the investment component of GDP and so increases GDP.
Economics
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