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QUESTION 3 Suppose a domestic steel maker produces a certain amount of steel but does not...

QUESTION 3

  1. Suppose a domestic steel maker produces a certain amount of steel but does not sell all of it during the year it was produced. How do we count the unsold steel towards domestic GDP?

    a. Since the unsold steel was not sold in the same year it was produced, we do not count it towards domestic GDP

    b. Since steel is most likely used as an intermediate good, we do not count steel at all

    c. We count the unsold steel as inventory investment

    d. We count the unsold steel as consumption
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Answer #1

c. We count the unsold steel as inventory investment.

Unsold goods are included in gdp in the year it was produced.

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