Question

An economy produces 10,000 computers valued at $2,000 each. Of these, 2,000 are sold to consumers, 3,000 are sold to businesses, 3,000 are sold to the government, and 1,000 are sold abroad. No computers are imported. The unsold computers at the end of the year are held in inventory by the computer manufacturers.

Please enter your answers as numeric responses with no decimal places. (ie. 4,000,000 or $4,000,000 not "Four million dollars") Also because these answers will be large numbers it is a good idea to use commas to separate the zeros in your answer (ie $4,000,000 not $4000000).

What is the total contribution to GDP from computers?  

Use the expenditure method to calculate the value of the investment component of GDP?

Answer 1

Contribution to GDP:

This would be the total value in dollars of computers produced during the period.

GDP = Number of computers × Price per computer

            = 10,000 × $2,000

            = $20,000,000 (Answer)

Investment component:

Under the expenditure method, the equation of GDP is as below:

GDP = Consumption + Investment + Govt. spending + Net export

Investment = Sold to businesses + Unsold products

                        = (3,000 × $2,000 + [(10,000 – (2,000 + 3,000 + 3,000 + 1,000) =) 1,000 × $2,000]

                        = $6,000,000 + $2,000,000

                        = $8,000,000 (Answer)