Bob sells his car to Stan's Used Car Lot for $5,000.Stan's Used Car Lot sells the car to Bill for $5,500.This transaction contributes ________ to GDP.

Question

Quizplus · Accepted Answer

Only the value added to the product contributes to GDP. In this transaction, Stan's Used Car Lot added value by reselling the car to Bill at a higher price. Therefore, the value added, which is $500, contributes to GDP. The original price that Bob sold the car for, $5,000, does not contribute to GDP since it is just a transfer of ownership.

Bob Sells His Car to Stan's Used Car Lot for $5,000.Stan's