Suppose a gold miner finds a gold nugget and sells the nugge

Suppose a gold miner finds a gold nugget and sells the nugget to a mining company for $500. The mining company melts down the gold, puriies it, and sells it to a jewelry maker for $1,000. The jewelry maker fashions the gold into a necklace which it sells to a department store for $1,500. Finally, the department store sells the necklace to a customer for $2,000 Instructions: Round your answer to the nearest dollar As a result of these transactions, GDP increases by $ 2000

Solution

Gdp is measured by three different methods a) income method b) expenditure method c) value-added approach or output method. Luckily the answer from all these methods is the same. We will use the income methods as it is straightforward.

In the above scenario, the consumer has bought the gold jewelry for $2000. Then the GDP will increase by $2000.

While calculating GDP we only take the value into account. So, here total expenditure is done worth $2000 by the consumer. And the goldsmith made an income of $2000 by selling the jewelry.  

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