<p>No, stock-piling unsold goods enters the national accounts as (involuntary) investment. That's why the produced but unsold car increases GDP in 2020. In 2021, selling the car counts as disinvestment (decreasing the stock) and increasing consumption. Because the decrease in investment and the increase in consumption exactly offset each other, GDP is unaltered in 2021.</p>

CC BY-SA 4.0
2024-09-26T16:44:03.180Z
+1 though that slightly depends on whether the investment/stock building is valued at production cost or at the future sale price.  If it is valued at production cost in 2020, and then sold at a higher price (to cover for example the pay and commission of the salesperson and any profit) then while the production would count in GDP in 2020, the difference would appear in 2021.
Henry
CC BY-SA 4.0
2024-09-26T18:05:23.020Z
@Henry True, but it's a textbook question that abstracts from any additional value-added due to the car being an intermediate good for subsequent steps of the value chain.
jpfeifer
CC BY-SA 4.0
2024-09-26T07:42:54.990Z
2024-09-26T07:42:54.990Z
jpfeifer
<p>This is question from MACROECONOMICS N. GREGORY MANKIW. Correct answer is <strong>D</strong>.</p>
<pre><code>The Ford Motor Company makes a car in 2020 and sells it to the Jones family in 2021. This event increases
a. both consumption and GDP in 2020.
b. both consumption and GDP in 2021.
c. consumption in 2020 and GDP in 2021.
d. consumption in 2021 and GDP in 2020.
</code></pre>
<p>My question is that if car added to GDP of 2020 and also added in Consumption(which is one of main components of GDP) in 2021, does it mean one car twice added to GDP?</p>

<macroeconomics><gdp>
GDP calculation with production and sales in different time periods
Dovud Asadov
# GDP calculation with production and sales in different time periods

(Asked by: username_0 on 2024-09-26)

This is question from MACROECONOMICS N. GREGORY MANKIW. Correct answer is D.
The Ford Motor Company makes a car in 2020 and sells it to the Jones family in 2021. This event increases
a. both consumption and GDP in 2020.
b. both consumption and GDP in 2021.
c. consumption in 2020 and GDP in 2021.
d. consumption in 2021 and GDP in 2020.

My question is that if car added to GDP of 2020 and also added in Consumption(which is one of main components of GDP) in 2021, does it mean one car twice added to GDP?

**Tags:** macroeconomics, gdp


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## 1 answers

### Answer by username_1 on 2024-09-26. Score: 7 | Accepted answer

No, stock-piling unsold goods enters the national accounts as (involuntary) investment. That's why the produced but unsold car increases GDP in 2020. In 2021, selling the car counts as disinvestment (decreasing the stock) and increasing consumption. Because the decrease in investment and the increase in consumption exactly offset each other, GDP is unaltered in 2021.

> **Comments:**
> **username_2**: +1 though that slightly depends on whether the investment/stock building is valued at production cost or at the future sale price.  If it is valued at production cost in 2020, and then sold at a higher price (to cover for example the pay and commission of the salesperson and any profit) then while the production would count in GDP in 2020, the difference would appear in 2021.  
> **username_1**: @username_2 True, but it's a textbook question that abstracts from any additional value-added due to the car being an intermediate good for subsequent steps of the value chain.  

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