Question

3. The U.S. had the following economic activity in 2018:

• $3,000 of steel is imported by Ford

• Ford exports $10,000 worth of vehicle chassis to Mexico

• Ford then reimports $20,000 of vehicles to the U.S. after some additions have been made

• Ford adds electronics and produces:

• $40,000 of cars sold to consumers

• $20,000 of cars sold to the gov’t

• $12,000 of cars remain unsold in 2018

• Consumers import $15,000 of food

What is the U.S. GDP in 2018?

Answer 1

GDP = Cars sold to consumers + Government + Unsold inventory + Exports – Imports

GDP = 40,000 + 20,000 + 12,000 + 10,000 – 15,000

GDP = $67,000

Thus, GDP of US in 2018 = $67,000

Note: Import of steel is not included in GDP because it is not a final good which is imported. It is a raw material or input imported by Ford for production of cars