Question

5. Briefly explain how each of the following transactions would affect annual GDP for 2019.

a. You sell your used 2009 model car for $8,000.

b. You purchase a 2019 Honda Pilot produced at the factory in Lincoln, Alabama for $31,450.

c. The Honda factory in Lincoln, Alabama, spends $3 million on new tires to install on the 2019 Honda Pilots they produce.

d. Due to a flat, you spend $330 on tire repair.

Answer 1

QUESTION-A-

sale and purchase of second hand goods are not included in the calculation of GDP,therefore this deal won't effect the GDP.

QUESTION-B

production of final goods and services are considered as final production under the value added manner of GDP,therefore this would be included in the calculation of GDP.

QUESTION-C-

the production and selling of tyers would be considered under GDP but it would be an intermediate consumption for the car company and would have been calculated under the value added method.

QUESTION-D

repair would transfer the amount from availing concern to service provider,garage has provided services and he would get the consideration in terms of the services rendered,this would be included in the calculation of GDP.