If you buy a $20,000 Toyota that was produced entirely in Japan, does this affect U.S. GDP? Show how this transaction would affect the appropriate expenditure categories that make up GDP.
a. Consumption expenditure: The purchase of the Toyota would be considered a consumption expenditure, as it represents a purchase of a new good by a household.

b. Imports: Since the Toyota was produced entirely in Japan, the purchase would be considered an import and would be subtracted from the GDP calculation.

c. Investment expenditure: If the purchase is for business purposes, it would be considered an investment expenditure and would be included in GDP.

d. Net exports: The purchase of the Toyota would represent a decrease in net exports, as it is an import, and would therefore have a negative impact on GDP.