<p>GDP is actual production. Since the car was produced last year, it adds to last year's GDP.  Since it wasn't sold, it would show up in inventory investment (which seems to be included in <strong>I</strong> in your equation). This year, when the car is sold, inventory investment goes down and consumption goes up by an equal amount, so there is no effect on GDP.</p>
<p>Pop quiz: analyze this example using the <em>income</em> approach to GDP.</p>

CC BY-SA 4.0
2021-05-04T20:41:21.513Z
2021-05-04T20:41:21.513Z
Daniel
<p>The equation for the GDP is: <span class="math-container">$$C+I+G+(X-M)$$</span></p>
<p>If consumers are buying new cars produced last year...would those still be included in the GDP?</p>

CC BY-SA 4.0
2021-05-04T21:39:09.720Z
Virtually equivalent question is already answered here https://economics.stackexchange.com/questions/11227/why-is-machine-built-this-year-but-not-sold-this-year-included-in-gdp?rq=1 please in the future research the site before posting
1muflon1
<macroeconomics><gdp>
Would a car that was produced last year but bought this year be accounted for in the GDP?
joshuaronis
# Would a car that was produced last year but bought this year be accounted for in the GDP?

(Asked by: username_0 on 2021-05-04)

The equation for the GDP is: $$C+I+G+(X-M)$$

If consumers are buying new cars produced last year...would those still be included in the GDP?

**Tags:** macroeconomics, gdp

> **Comments:**
> **username_1**: Virtually equivalent question is already answered here https://economics.stackexchange.com/questions/11227/why-is-machine-built-this-year-but-not-sold-this-year-included-in-gdp?rq=1 please in the future research the site before posting  

---

## 1 answers

### Answer by username_2 on 2021-05-04. Score: 0

GDP is actual production. Since the car was produced last year, it adds to last year's GDP. Since it wasn't sold, it would show up in inventory investment (which seems to be included in **I** in your equation). This year, when the car is sold, inventory investment goes down and consumption goes up by an equal amount, so there is no effect on GDP.

Pop quiz: analyze this example using the *income* approach to GDP.


---

