Answer to Question #50757 in Macroeconomics for bob

Question #50757
Suppose a government collects $10B in income taxes, pays a firm $2B to build a bridge, pays its own workers $1B, transfers $4B to poor citizens and pays $3B in interest payments to government bondholders. This government’s operations add $10B to the measurement of GDP. Explain in detail: True False or Uncertain
1
Expert's answer
2015-02-17T11:35:52-0500
Suppose a government collects $10B in income taxes, pays a firm $2B to build a bridge, pays its own workers $1B, transfers $4B to poor citizens and pays $3B in interest payments to government bondholders. According to income approach, the change in GDP is $10B (income taxes). And according to expenditure approach, the change in GDP is $10B too (2+1+4+3 = $10B). So, this government’s operations add $10B to the measurement of GDP. That's why the statement is True.

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