Question

If an automobile manufacturer pays $200 for a car windshield, $400 for four car tires, $100 for a car CD player, and sells cars made with these parts for $20,000, then each car the automobile manufacturer sells contributes how much to GDP?

a. $19,300
b. $20,000
c. $20,200
d. $20,700

Answer 1

Answer: B - $20,000

Step-by-step explanation:

The Gross Domestic Product (GDP) is the value of all final goods and services produced in an economy within a particular time frame which is usually a year.

It's only final goods and services that are added in the calculation of GDP.

The parts used in the production of the car are intermediate goods.

Intermediate goods are goods that are used for the production of the final good.

Therefore, it is only the cost of the car - $20,000 that is added in the calculation of GDP as the contribution of the car manufacturer.

I hope my answer helps you.