An economy produces only 500,000 tables valued at $100 each. Of these, 100,000 are sold to consumers, 200,000 are sold to businesses, 100,000 are sold to the government, and 50,000 are sold abroad. No tables are imported. The unsold tables at the end of the year are held in inventory by the table manufacturers. What is the value of GDP?

Question

Quizplus · Accepted Answer

GDP is calculated as the total value of all goods and services produced within a country. Here, all 500,000 tables are produced domestically and valued at $100 each, resulting in a GDP of $50 million (500,000 tables x $100). Unsold tables are counted as inventory investment, which is part of GDP.

An Economy Produces Only 500,000 Tables Valued at $100 Each