Imagine that Jack and Jill buy $500 worth of milk and $200 worth of crayons and coloring books each year for use in their day-care business.Jack and Jill also hire a day-care attendant at a salary of $14,000 per year.If Jack and Jill sell $100,000 worth of day care to parents each year,what is the contribution to GDP by Jack and Jill's Day Care?

Question

Quizplus · Accepted Answer

The contribution to GDP is the total value of goods and services produced, which in this case is the $100,000 worth of day care services sold to parents. The costs of inputs and salaries are not subtracted when calculating GDP.

Imagine That Jack and Jill Buy $500 Worth of Milk