In 2019, Agnieszka sells her five-year-old Harley-Davidson motorbike to Used Choppers, Inc. for $11000. In the same year, Used Choppers, Inc. resells the motorbike to James for $12800. What is the contribution of these transactions to GDP in the year 2019?Group of answer choices$1800$0$12800$23800$11000
Question
In 2019, Agnieszka sells her five-year-old Harley-Davidson motorbike to Used Choppers, Inc. for 12800. What is the contribution of these transactions to GDP in the year 2019?Group of answer choices023800$11000
Solution
The contribution of these transactions to GDP in the year 2019 is $12800.
Here's why:
Gross Domestic Product (GDP) measures the value of final goods and services produced within a country in a given period. In this case, the final good is the Harley-Davidson motorbike.
When Agnieszka sells her used motorbike to Used Choppers, Inc., this is a transfer of ownership, not a new production. Therefore, it does not contribute to the GDP.
However, when Used Choppers, Inc. resells the motorbike to James, this is considered a final sale, and thus, it contributes to the GDP. The value of this transaction is $12800, which is the contribution to the GDP.
So, the correct answer is $12800.
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