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.
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.
Let's go through each answer and see if they are correct or need to be adjusted.
a) America GNP: You mentioned that it would increase, and that is correct. GNP stands for Gross National Product, which includes all the goods and services produced by American-owned businesses, regardless of their location. Since the product is made by an American company, it would contribute to America's GNP.
b) Japan GDP: You mentioned that it would increase, and that is correct. GDP stands for Gross Domestic Product, which measures the value of all goods and services produced within a country's borders. Since the production is taking place in Japan, it would contribute to Japan's GDP.
c) America Net Export: You mentioned that it would decrease, and that is correct. Net exports represent the value of a country's exports minus the value of its imports. Since Americans are buying something from a foreign country, it counts as an import, which would decrease America's net exports.
d) Japan Net Export: You mentioned that it would increase, and that is incorrect. Similar to the previous answer, net exports represent the value of a country's exports minus the value of its imports. In this scenario, the product is being sold to American citizens, so it counts as an export for Japan, not an import. Therefore, Japan's net export would increase.
e) Japan Consumption: You mentioned that it would not be affected, and that is incorrect. While it is true that no Japanese citizens are consuming the goods directly, the overall consumption in Japan could still be impacted indirectly. For example, if the American company generates profit from the sale, it may employ Japanese workers or invest in other Japanese industries, which could lead to increased consumption by Japanese citizens.
f) Japan GNP: You mentioned that it would not be affected, and that is incorrect. GNP includes all the goods and services produced by a country's residents (regardless of their location) and owned by a country's residents (regardless of their location). Since the company is owned by Americans, the income generated from the sale would be included in America's GNP, not Japan's.
g) America GDP: You mentioned that it would decrease, and that is incorrect. Similar to the previous answer, GDP only considers the value of goods and services produced within a country. Since the production is happening in Japan, it would not directly contribute to America's GDP.
h) America Consumption: You mentioned that it would increase, and that is correct. American citizens buying imported goods results in an increase in consumption, as they are using those goods for personal use or consumption.
To summarize the corrections:
a) America GNP - Correct
b) Japan GDP - Correct
c) America Net Export - Correct
d) Japan Net Export - Incorrect (it would increase)
e) Japan Consumption - Incorrect (it could be affected indirectly)
f) Japan GNP - Incorrect (it would be included in America's GNP)
g) America GDP - Incorrect (it would not directly contribute to GDP)
h) America Consumption - Correct
I hope this clarifies any misunderstandings and helps you understand the concepts better!