In November of year 1, Econland Motors produced an automobile that was delivered to a local dealership in December that same year. The auto was then sold to Sharon Smith for personal use
The next year in February, year 2. Following national income accounting practices, this auto would
Be counted as part of
A) consumption in year 1 and consumption in year 2.
B) consumption in year 1 and investment in year 2.
C) negative investment in year 1 and consumption in year 2.
D) investment in year 1 and negative investment in year 2.

Question

Quizplus · Accepted Answer

The automobile is counted as investment in year 1 when it is produced and delivered to the dealership. When it is sold to Sharon Smith in year 2, it is counted as negative investment, as it is no longer part of the dealership's inventory.

In November of Year 1, Econland Motors Produced an Automobile