Ford Motors produces a $20,000 car in Detroit in November 2017. This car is sold to a consumer in January 2018 for $20,000, who in turn sells it to a college student in June 2018 for $18,000. Because of these transactions, the 2017 GDP increased by _____, and the 2018 GDP increased by:

Question

Quizplus · Accepted Answer

GDP measures the market value of all final goods and services produced within a country in a given period. The car's production in 2017 adds $20,000 to the 2017 GDP. The subsequent sales in 2018 are merely transfers of ownership and do not contribute to the 2018 GDP, as the car is not a newly produced good in that year.

Ford Motors Produces a $20,000 Car in Detroit in November