CFA Practice Question

There are 539 practice questions for this study session.

CFA Practice Question

A consumer purchases a refrigerator (a durable good) which costs $1,000. The retail store makes a $50 profit out of the transaction. The refrigerator is expected to last for 10 years. The GDP should be added to by ______.
A. $100, since it is depreciable for 10 years using straight-line depreciation
B. $1,000
C. $950, since the retail store's profit should not be counted in GDP
Explanation: Although the refrigerator will be enjoyed for over 10 years, its price is fully counted at the time it is bought.

User Contributed Comments 2

User Comment
HenryQ Which approach is used here? Value added, consumption or income?
monikat the cost of production of final goods is added to the GDP. check the GDP statement.
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