Figure 6-2 shows a spending flow model where both consumption and investment goods are being produced. Use the figure to answer questions .
Figure 6-2
-Refer to Figure 6-2. A New York restaurant purchases 1,000 cases of wine from a winery in France. This transaction is recorded as part of:
A) gross private investment and the flow is represented by 2.
B) net exports and the flow is represented by 4.
C) consumption expenditure and the flow is represented by 1.
D) consumption expenditure and the flow is represented by 4.

Question

Figure 6-2 shows a spending flow model where both consumption and investment goods are being produced. Use the figure to answer questions .
Figure 6-2 
-Refer to Figure 6-2. A New York restaurant purchases 1,000 cases of wine from a winery in France. This transaction is recorded as part of:
A) gross private investment and the flow is represented by 2. 
B) net exports and the flow is represented by 4. 
C) consumption expenditure and the flow is represented by 1. 
D) consumption expenditure and the flow is represented by 4.

Quizplus · Accepted Answer

The transaction of the New York restaurant purchasing 1,000 cases of wine from a winery in France is an example of an export, which is recorded as part of net exports. The flow representing net exports is 4 in Figure 6-2. It is not an investment by the restaurant, so it is not part of gross private investment which is represented by flow 2. It is also not a consumption expenditure by households (flow 1) or firms (flow 3).

Figure 6-2 Shows a Spending Flow Model Where Both Consumption