Question

Imagine that Jack and Jill buy $500 worth of milk and $200 worth of crayons and coloring books each year for use in their day-care business. Jack and Jill also hire a day-care attendant at a salary of $14,000 per year. If Jack and Jill sell $100,000 worth of day care to parents each year, what is the contribution to GDP by Jack and Jill's Day Care? A. $114,700 B. $100,700 C. $100,000 D. $700

Answer 1

Answer:

The correct answer is option C.

Explanation:

The GDP of an economy includes only the final goods and services produced in the economy in the given period of time.

In the given example , the day care shows the service provided by Jack and Jill.

The crayons and color books, milk, attendants are all intermediate goods and services.

So their values will not be included in the GDP.

The GDP will only include the value of daycare sold which is $100,000.