Question

Suppose a new sandwich restaurant is opening on your street. On the opening day, you order a sandwich for $15. While you are eating it, you realize that the sandwich is not very good. On the next day, you decide to make the $15 sandwich by yourself. You get all ingredients from the local supermarket for $5. How much does GDP increase by over both days together?

a. $5
b. $15
c. $20
d. $30

Answer 1

Answer:

c. $20

Explanation:

GDP (Gross Domestic Product) is the total monetary value of goods and services produced within the borders of the United States, regardless of who owns the assets or the nationality of the labor used in the production of that product.

GDP = C + I + G + (X - M)

The first day:

Consumption $ 10

Investment  $ 5

Second day:

Expenses: $ 5

GDP = $20