Question

An economy produces only 1,000,000 computers valued at $2,000 each. Of these, 200,000 are sold to consumers, 300,000 are sold to businesses, 300,000 are sold to the government, and 100,000 are sold abroad. No computers are imported. At the end of the year, the computer manufacturers hold the unsold computers in inventory. What is the value of GDP?

Answer 1

Answer:

The answer is: The total value of GDP is $2 Billion

Explanation:

The formula for calculating GDP is:

GDP = C + I + G + (X – M) = $1,000 MM + $200 MM + $600 MM + $200 MM

GDP = $2,000 MM (or $2 Billion)

• consumption: $1 billion ($400 MM consumers + $600 MM businesses)
• investment: $200 MM (change in inventories)
• government: $600 MM
• exports - imports: $200 MM (no imports)