Part II: Multiple Choice 1. An economy produces 1,000 computers valued at $2,000

Question

Part II: Multiple Choice 1. An economy produces 1,000 computers valued at $2,000 each. Households purchase 200 computers of which 100 are imported. Businesses purchase 300 domestically produced computers. The government purchases 300 domestically produced computers and 100 domestically produced computers are sold abroad. The unsold computers at the end of the year are held in inventory by the computer manufacturers. What is the value of the investment component of GDP? A) $0.4 million B) C) $0.8 million D) S0.9 million E) $0.6 million $1 million

Explanation / Answer

B) $ 0.6 million

Investment is the purchase of computer by businesses.

Investment = 300 computers x 2000 = $ 600,000 = $ 0.6 million

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