Question

A U.S.-owned automobile factory uses $100,000 worth of parts purchased from foreign countries along with U.S. inputs to produce 30 cars worth $20,000 each. Twenty of these cars are sold and 10 are left in inventory. How much did these actions add to GDP?A. $300,000B.$500,000C.$600,000D.$700,000

Answer 1

B. $500,000

Step-by-step explanation:

In this question, we have to apply the GDP formula which is given below:

GDP = Cost of total produced cars - imports

where,

Cost of total produced cars would be

= Number of cars produced × price per car

= 30 cars × $20,000

= $600,000

And, the imports would be $100,000

So, the GDP would be

= $600,000 - $100,000

= $500,000