Al's Aluminum Company sells $1 million worth of aluminum to Shiny Foil Company,which uses the aluminum to make aluminum foil.Shiny Foil Company sells $4 million worth of aluminum foil to households.The transactions just described contribute how much to GDP?

Question

Quizplus · Accepted Answer

GDP only includes the value of final goods and services. The $4 million worth of aluminum foil sold to households is the final product, so it is included in GDP. The $1 million worth of aluminum sold to Shiny Foil Company is an intermediate good and is not counted separately in GDP to avoid double counting.

Al's Aluminum Company Sells $1 Million Worth of Aluminum to Shiny