Question

A car manufacturer in Vancouver makes $8700 worth of cars this year, using $100 of engines produced this year in Toronto, $200 in car radios produced in Vietnam, and $100 in tires produced last year in Calgary. The car manufacturer sells $400 of these cars this year. As a result of these economic activities, Canadian GDP this year increases by $______.

Answer 1

The Canadian GDP increases by $8600.

Step-by-step explanation:

The GDP is the total value of all goods and services produced in a country in a year. In this case, the car manufacturer in Vancouver produces $8700 worth of cars. The only goods and services that are produced in Canada are the engines and the cars. The car radios were produced in Vietnam and the tires were produced in Calgary last year. Therefore, the only goods and services that contribute to the Canadian GDP are the engines and the cars. The value of the engines is $100 and the value of the cars is $400. Therefore, the Canadian GDP increases by $8600.

It is important to note that the value of the cars that are sold is not included in the calculation of the GDP. The GDP only measures the value of goods and services that are produced. The value of goods and services that are sold is included in the calculation of the GNP, which is the gross national product. The GNP is the total value of all goods and services produced by a country's residents, regardless of where they are produced.