Macroeconomics - GDP

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Please check my answers to see if they are correct, if not, can you please fix them! Thank you.

American citizens buy something made from an American company in Japan who uses all Japanese labour and machines. Would the following increase, decrease or unaffected? Explain.

a) America GNP
b) Japan GDP
c) America Net Export
d) Japan Net Export
e) Japan Consumption
f) Japan GNP
g) America GDP
h) America Consumption

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Here's what I think...

a) America GNP
It would increase because anything owned by Americans is included in the GNP.

b) Japan GDP
It would increase because the production is in Japan (within the nation). It would be included in investment.

c) America Net Export
It would decrease because Net Export is part of the GDP. Specifically, import is affected, which will subtract away from the GDP.

d) Japan Net Export
It would increase because the nation is exporting domestic production to foreign customers.

e) Japan Consumption
It would not be affected because no Japanese are consuming the goods.

f) Japan GNP
It would not be affected because the company in Japan is not owned by the Japanese.

g) America GDP
It would decrease because only import is affected, which takes away from the GDP.


h) America Consumption
It would increase because American citizens are buying imported goods.

  • Macroeconomics - GDP -

    I agree with all of your answers except g). I think America GDP remains constant. The increase in american consumption exactly offsets the change in net exports.

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