In November 2009, Econland Motors produced an automobile that was delivered to a local dealership in December 2009. The auto was then sold to Sharon Smith for personal use in February of 2010. Following national income accounting practices, this auto would be counted as part of:
A) Consumption in 2009 and consumption in 2010
B) Consumption in 2009 and investment in 2010
C) Negative investment in 2009 and consumption in 2010
D) Investment in 2009 and negative investment in 2010

Question

Quizplus · Accepted Answer

The automobile is counted as investment in 2009 when it was produced and added to the dealership's inventory. When it was sold to Sharon Smith in 2010, it is considered a negative investment as it is removed from inventory and counted as consumption.

In November 2009, Econland Motors Produced an Automobile That Was