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If a carpenter buys wood for $100 and requited equipment for $100 and uses them to produce and...

Question:

If a carpenter buys wood for $100 and requited equipment for $100 and uses them to produce and sell $500 worth of small tables to consumers, the contribution to GDP is $700.

True

False

What Is GDP:

A country's GDP (which stands for Gross Domestic Product) is one of the most popular metrics used by economists to measure economic activity in a given country. The GDP includes the value of all goods produced in a given country during the year.

Answer and Explanation:

The answer is False.

  • The cost of primary materials and equipment used to manufacture goods are not considered final sales and thus are not included in GDP. The GDP will only include the value of the finished products sold to consumers, which in this case is $500 (not $700). Therefore the correct answer is $500.

Learn more about this topic:

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Gross Domestic Product: Definition and Components

from Economics 102: Macroeconomics

Chapter 4 / Lesson 3
66K

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