A U.S.-owned car factory in Mexico produces $5 million of cars.$2.5 million of these cars are sold in Mexico and the other $2.5 million are sold in the U.S.In both cases $1 million of the value of the cars was due to U.S-owned equipment located in Mexico and U.S.managers working in Mexico.How much did this production contribute to U.S.GDP?

Question

Quizplus · Accepted Answer

The production contributes $0 to U.S. GDP because GDP measures the value of goods and services produced within a country's borders. Since the production occurred in Mexico, it does not count towards U.S. GDP.

A US-Owned Car Factory in Mexico Produces $5 Million of Cars