Question

Consider two cars manufactured by Chevrolet in 2007. During 2007, Chevrolet sells an Impala to Sean for $24,000. Later in the same year, Sean sells the Impala to Kati for $19,000. The second automobile, a Malibu with a market value of $30,000, is unsold at the end of 2007 and it remains in Chevroletâ??s inventory. It is sold in early 2008 for $28,000. The transactions just described contribute how much to GDP for 2007?

Answer 1

$54,000

Step-by-step explanation:

Total money contributed to the GDP = market value of the two cars

Given that

First car = 24000

Second car = 30000

Therefore,

Total money contributed to 2007 GDP = 24000 + 30000

= $54000

Recall that, GDP is a measure of the total market value of all final/finished goods and services produced within the geographical border of that country. Therefore, the car produced but not sold us counted as inventory for the seller which then falls under the investment bracket of GDP. Hence the answers. Also, it is important to note that value of used goods resold are not counted under GDP. Hence why Sean sale to Kati for 19000 is not counted.