An economy produces 1,000,000 computers valued at $2,000 each. Households purchase 200,000 computers, of which 100,000 are imported. Businesses purchase 300,000 domestically produced computers, the government purchases 300,000 domestically produced computers, and 100,000 domestically produced computers are sold abroad. At the end of the year, the computer manufacturers hold the unsold computers in inventory. What is the value of the investment component of GDP?

Question

Quizplus · Accepted Answer

Investment is the amount of computers purchased by businesses (300,000)plus the amount of computers added to inventory (200,000), so investment is 500,000 × $2,000 = $1.0 billion.

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