An economy produces only 1,000,000 computers valued at $2,000 each.Of these,200,000 are sold to consumers,300,000 are sold to businesses,300,000 are sold to the government,and 100,000 are sold abroad.No computers are imported.The unsold computers at the end of the year are held in inventory by the computer manufacturers.What is the value of the private-sector investment component of GDP?
A) $0.3 billion.
B) $0.4 billion.
C) $0.6 billion.
D) $0.7 billion.
E) $0.8 billion.

Question

Quizplus · Accepted Answer

The private-sector investment component of GDP includes business purchases and changes in inventory. Business purchases are 300,000 computers, and the change in inventory is 100,000 unsold computers. Therefore, the investment component is (300,000 + 100,000) * $2,000 = $800,000,000 or $0.8 billion.

An Economy Produces Only 1,000,000 Computers Valued at $2,000 Each