When IBM, an American Firm, Produces Computer Chips in Another

question 270

True/False

When IBM, an American firm, produces computer chips in another country, this production is not included in U.S. GDP because the production did not take place in the United States.

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Definitions:

Payroll Tax Expense

The employer’s expense associated with the employment taxes (Social Security, Medicare, and unemployment taxes) on the wages paid to employees.

Federal Unemployment Taxes

Taxes paid by employers based on employee wages/salaries to fund unemployment compensation to workers who have lost their jobs.

Medical Insurance

Health care insurance for which premiums may be paid through a deduction from an employee’s paycheck.

State Income Tax

Taxes levied on income by individual states, varying widely in rate and structure from state to state.