Answer to Question #159893 in Macroeconomics for hellen

Question

For each of the following, identify which part of aggregate spending t is part of, and whether it is part of US value added.

(a) A computer CPU produced in Taiwan, that is bought by Dell to be part of a personal computer it plans to sell later.

(b) A computer CPU produced in California, that is bought by a US retailer to be sold

directly to a US consumer, but which has not been purchased yet.

(c) A personal computer produced by Dell in Texas by a US library district to be used in a

public library.

Answer 1

(a) A computer CPU produced in Taiwan, that is bought by Dell to be part of a personal computer it plans to sell later.

This is an import to the US economy as do not add value to the economy of US but Taiwan's economy. Net export= ( total export's - total imports)

(b) A computer CPU produced in California, that is bought by a US retailer to be sold

directly to a US consumer, but which has not been purchased yet.

This is an investment expenditure that adds value to the US economy

(c) A personal computer produced by Dell in Texas by a US library district to be used in a

public library.

This is a form government expenditure that provides a public utility to add value of labour of American citizens who study in the library to gain skills.