Question

Jim's Nursery produces and sells $1100 worth of flowers. Jim uses no intermediate inputs. He pays his workers $700 in wages, pays $100 in taxes and pays $200 in interest on a loan. Jim's contribution to GDP isA) $900.
B) $1000.
C) $1100.
D) $1800

Answer 1

Answer:

C) $1100.

Explanation:

GDP is the sum of all final goods and services produced in an economy over a given period of time. The GDP calculation takes into account only the final goods and services, not counting the intermediate imputs so that nothing is double counted. For example, in the breadmaking process, flour is accounted for by the flour supplier. The bread supplier should then account only for the value of the bread. In the case of flowers, there are no intermediate inputs. Thus, Jim's contribution to GDP is the total value of flowers sold, which is $ 1100.