An Economy Produces 1,000,000 Computers Valued at $2,000 Each

question 118

Multiple Choice

An economy produces 1,000,000 computers valued at $2,000 each. Households purchase 200,000 computers, of which 100,000 are imported. Businesses purchase 300,000 domestically produced computers, the government purchases 300,000 domestically produced computers, and 100,000 domestically produced computers are sold abroad. The unsold computers at the end of the year are held in inventory by the computer manufacturers. What is the value of GDP?

• A) $0.9 billion
• B) $1.0 billion
• C) $1.8 billion
• D) $2.0 billion

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Definitions:

Cost System

An accounting framework used to record, track, and analyze the costs associated with a company's operations, helping in budgeting and financial decision-making.

Processing Department

A processing department is a division within a manufacturing facility where a specific stage of production is carried out, essential in process costing systems.

Process Costing

A costing method used when nearly identical products are produced through continuous processes, allocating costs based on process departments.

Journal Entries

The records of financial transactions in the double-entry bookkeeping system, where each transaction is noted in two accounts (debit and credit).