Question

An American soldier stationed in North Carolina receives a paycheck from the federal government for $300, which she uses to purchase a $100 MP3 player made in China by a Chinese firm and $200 for fruit and vegetables from a local farmers market. As a result, U.S. GDP increases by?

Answer 1

The U.S. GDP increases by $200.

Explanation:

Gross domestic product or GDP is the value of finished goods and services made within a country in terms of money.

Here as given that the American soldier living in US purchased a $100 MP3 player made in China by a Chinese firm, this will not increase the GDP as the firm is Chinese.

But when he purchased fruits from a local farmers market, then he is contributing to the GDP of US.

Hence, U.S. GDP increases by $200.