Consider two cars manufactured by Chevrolet in 2007.During 2007,Chevrolet sells one of the two cars to Sean for $24,000.Later in the same year,Sean sells the car to Kati for $19,000.The second automobile,with a market value of $30,000,is unsold at the end of 2007 and it remains in Chevrolet's inventory.The transactions just described contribute how much to GDP for 2007?

Question

Quizplus · Accepted Answer

The sale of the car from Chevrolet to Sean for $24,000 is not included in GDP as it is an intermediate transaction. However, the sale of the same car from Sean to Kati for $19,000 is included in GDP as it is a final transaction. The value of the unsold car in Chevrolet's inventory at the end of 2007 is not included in GDP as it is not a final transaction. Hence, the total contribution to GDP is the sum of the final transaction, which is $19,000. Also, the value of the unsold car is not a part of GDP. Thus, the total contribution to GDP for 2007 is $19,000 + $30,000 = $54,000.

Consider Two Cars Manufactured by Chevrolet in 2007