Question

Kansas farmers sell $1,500 of wheat to food processors. Processors sell $3,500 of flour to bakers. Bakers use the flour to produce $5,500 bread and sell it to consumers. Additionally, U.S. car makers import $17,500 of steel from China and produce cars. $12,500 of cars are sold to Uber and $16,000 of cars are sold to U.S. consumers. What is the GDP of the U.S. in 2018?

Answer 1

$17,000

Step-by-step explanation:

In bread all the raw materials and value addition is domestic hence will be a part of GDP i.e $5500 will be added.

In case of cars irrespective to whom it is sold the value produced domestically will be a part of GDP,

hence,

total value:

= 12500 + 16000

= $28,500

but $17500 is not produced domestically (imported) hence will not be a part of GDP.

Hence,

Added in GDP:

= 28,500 - 17,000

= $11,500 will be added in GDP

Therefore, GDP of the U.S. in 2018:

= $5,500 + $11,500

= $17,000