What is the immediate effect of each of the following events on U.S. GDP and its components?
1. someone, at the age of 94, retires reluctantly and receives a social security check.
2. someone, after steadfastly labored and saved for many years, fulfills his American dream and buys an Italian sports jacket.
Can anyone please explain it to me!?Or give me some hints????
THANK YOU SO MUCH!
Consumption increases the GDP; transfer payments such as Social Security checks do not.
I am assuming that the sport jacket was purchsed in the USA. The fact that the sport jacket is Italian does not mean that the purchase does not contribute to the US GDP. It will affect the trade deficit