- CFA Exams
- CFA Level I Exam
- Study Session 4. Economics (1)
- Reading 14. Aggregate Output, Prices, and Economic Growth
- Subject 1. Gross Domestic Product
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. |