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Farmer John produces oranges. He sells half of his inventory to people at his roadside stand for $20,000 and sells the other half to Tropicali for $15,000. Tropicali uses the oranges to make orange juice, which it sells to consumers for $25,000. The impact of these transactions on gross domestic product (GDP) is?

Respuesta :

Answer:

These transactions will cause the GDP to increase by $45,000.

Explanation:

The GDP or gross domestic product of the nation includes the value of final goods and services produced within the geographical boundaries of a nation in a given period of time.  

So GDP does not include the value of intermediate goods.  

In the given example, the $20,000 worth of oranges sold to people is final good. While oranges sold to make orange juice is an intermediate good. The orange juice sold directly to consumers is the final good.  

Increase in GDP  

= $20,000 + $25,000

= $45,000

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