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El Paso, Texas.  The Juarez plant cuts the fabric for the jeans, and the El Paso plant
assembles the pieces into finished jeans.  In a given year, the Juarez plant ships
$40 million worth of cut fabric to the El Paso plant which, in turn, adds $60 million
of additional value.  In the end, $100 million of final product comes out of the El Paso
plant.  One half of these jeans are sold in the U.S. and the other half are shipped to
retailers in France.
 
How would this activity be reflected in U.S. GDP and its components?
 
 
 
 
the information in the table to answer the questions below.
Amount
(in billions of dollars)
 
 
Questions:
 
 
 
 
 
 
 
 
investment (I) be?
 
 
 
 
Netherlands currently has net capital outflow of approximately 4 percent of her GDP.
To help prepare for future demographic changes that are likely to strain the
government budget, the Netherlands decides to reduce its provision of government
services (G).  Use a S/I diagram to illustrate the effects of this cut in government
spending on (1) net capital outflow and (2) domestic investment spending.
Show both the equilibrium before the cut in G and the new equilibrium after
adjustments have been made.  Label your diagram fully.
 
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 ,Calculations of Gross Domestic Product