Explain How Each of the Following Transactions Would Affect GDP

question 137

Essay

Explain how each of the following transactions would affect GDP for the current year.Which spending categories are affected?
(A)Ford has 10,000 newly produced cars left over at the end of the year and adds them to its inventory.
(B)The state of California repaves Highway 80.
(C)The federal government decides to increase welfare payments.
(D)You take a trip to Mexico for spring vacation.

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Definitions:

Accounts

Refers to records in bookkeeping that track financial transactions and their impacts on specific areas, such as assets, liabilities, and equity.

Accrual Accounting

An accounting method that records revenues and expenses when they are earned or incurred, regardless of when cash transactions occur.

Revenues Recorded

The act of documenting income generated from normal business operations, such as sales of goods or services, in the financial records.

Vertical Analysis

A financial analysis method in which each entry for each of the three major categories of accounts (assets, liabilities, and equity) in a balance sheet is represented as a proportion of the total account.