In 2007,Corny Company grows and sells $2 million worth of corn to Tasty Cereal Company,which makes corn flakes.Tasty Cereal Company produces $6 million worth of corn flakes in 2007,with sales to households during the year of $4.5 million.The unsold $1.5 million worth of corn flakes remains in Tasty Cereal Company's inventory at the end of 2007.The transactions just described contribute how much to GDP for 2007?

Question

Quizplus · Accepted Answer

The GDP contribution is the total value of final goods and services produced. The $6 million worth of corn flakes includes both the $4.5 million sold to households and the $1.5 million added to inventory, which is considered investment. The $2 million worth of corn is an intermediate good and not counted separately in GDP.

In 2007,Corny Company Grows and Sells $2 Million Worth of Corn