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 the private-sector investment component of GDP?
A) $2 billion.
B) $10 million.
C) $20 million.
D) $25 million.
E) $50 million.

Question

Quizplus · Accepted Answer

The private-sector investment component of GDP refers to the total value of investment made by private businesses. In this scenario, private businesses purchased 200,000 tables valued at $100 each, which amounts to $20 million. Since these tables were not resold and were held as inventory, they count as investment. Therefore, the value of the private-sector investment component of GDP is $20 million.

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