Question

This month, Ivan bought a new car (built in 2019) for $25,000, Erika bought a used car from Ivan for $15,000, and Stan had his 2017 model car repaired for $1,000. How much did these three car transactions contribute to the 2019 GDP?

Answer 1

Only newly produced finished goods and services produced within the border of the country which increase the inventories are calculated under GDP.

Resale of goods produced in past years are not included under GDP

Coming to the above question :-

• New car by Ivan for $25,000 will be included in the GDP
• Old car purchased by Erika for $15,000 not included in GDP as it's a purchase of an old good.
• Repair cost of Stan's 2017 model car for $1,000 is included in GDP as it's a cost of service and newly added equipment in Stan's old car.

Hence, only Evan's purchase of old car not included in GDP

​​​​​​​So, Total contribution to GDP = $25,000 + $1000

= $26,000

​​​​​​​$26,000 contributed to the 2019 GDP