A U.S.firm produces nail guns in the first quarter of 2010 and adds them to its inventory.In the second quarter of 2010 the firm sells the nail guns to a U.S.construction company.In which quarter(s)is (are)GDP higher?

Question

Quizplus · Accepted Answer

GDP is higher in the first quarter because the production of nail guns adds to inventory investment, which is part of GDP. In the second quarter, selling the nail guns does not increase GDP further, as it is merely a transfer from inventory to final sales.

A USFirm Produces Nail Guns in the First Quarter of 2010