Asap upvote guarantee QUESTION 4 An American company produces $10 million worth

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QUESTION 4 An American company produces $10 million worth of cars in their factory located in Brazil. They pay $2 million in wages to Brazilian workers and S1 million for rent to a Brazilian company and they have no other costs. They send $5 million worth of cars back to the US and sell them to Americans.The rest of the cars are sold in Brazil. Which of the following is correct? O US consumption increases by $5 million and US GDP increases by $5 million Factor payments to abroad increase by $3 million and US consumption increases by $5 million US national income increases by $7 million but US GDP remains unchanged. Factor payments to abroad increase by $7 million and US GDP increases by $7 million.

Explanation / Answer

Factor payments to abroad(Brazil) by American company is the payment to Brazilian workers and rent to Brazilian company = $(2+1) million = $3 million

The company sends $5 million worth of cars to America and sells them to Americans. It means US consumption spending on cars increases by $5 million.

Answer- Factor payments to abroad increase by $3 million and US consumption expenditure increases by $5 million

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