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?

Question

Quizplus · Accepted Answer

Since all of the computers are sold domestically or held in inventory, and because no computers are imported, the value of GDP is the number of computers times their market value. That is 1,000,000 × $2,000= $2,000,000,000, or $2 billion.

An Economy Produces Only 1,000,000 Computers Valued at $2,000 Each