Question

For each of the listed transactions enter a numerical value to indicate the contribution to GDP. If the transaction does not affect GDP then enter the number zero (0).

In September, Joe sells his four-year old car to CarMax (a used car company) for $2,000, and the next week CarMax sells the car to Fred for $2,600. ______

Jack pays a college student $100 to help him move. ______

Restaurant Q pays $500 for the fish it will use in its daily special fish dinner. ______

Mary pays $50 for the fish she will serve her family for dinner. $ General Motors produces 10 trucks at a cost of $15,000 each. ______

They sell 9 trucks to consumers for $20,000. $ It is John’s lucky day! He wins the lottery and takes home $50,000. ______

John spends $20,000 of his lottery winnings on a new car. $ Wilma uses $4,000 from her savings account to buy government bonds. ______

Answer 1

1.

$600

It is the services value earned by CarMax that will be added to the GDP.

2.

$100

It is the value of service that is added to the GDP.

3.

$0

fish of $500 is intermediate good, but GDP only considers value of final products.

4.

$50

It is the value of final product fish getting consumed.

5.

$195000

The value of 9 trucks of 20000 each and one unsold truck of 15000 will be added to the GDP

6.

$0

Lottery income will not be the productive item and it will not be added in the GDP.

7.

$20000

It is the value of car, added to the GDP.

8.

$0