Government purchases include purchases made by all

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Unformatted text preview: vestment, and expenditures made by the government sector are called government purchases. (Government purchases include purchases made by all three levels of government—local, state, and federal.) Finally, the expenditures made by the residents of other countries on goods produced in the United States are called export spending. Exhibit 11-5 on page 294 gives examples of goods purchased by households, businesses, government, and foreigners. Consider all the goods and services produced in the U.S. economy in a year: houses, tractors, watches, restaurant meals, cars, computers, plasma television sets, DVDs, iPods, cell phones, and much, much more. Suppose someone from the household sector buys a DVD. This purchase falls into the category of consumption. When someone from the business sector buys a large machine to install in a factory, the purchase is considered an investment. If the U.S. government purchases a tank from a company that produces tanks, the purchase is considered a government purchase. If a perso...
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