Question

Company X sells leather to company Y for $60,000. Company Y uses the leather to make shoes, selling them to consumers for $180,000. The total contribution to gross domestic product (GDP) is

Answer 1

Answer: $180,000

Explanation:

Gross Domestic Product (GDP) is the total monetary value of all finished goods and services made within a country during a specific period. It can be used to estimate the size and growth rate of the country's economy.

In the case above Company X sell leather which is not a finished good to Company Y, so it will not contribute to the gross domestic product (GDP). Company Y sells leather shoes which is a finished good to the consumers, which will contribute to the GDP.

Therefore the total contribution to GDP is $180,000