The Impact of Honda's Car Production on GDP in 2019

What was the effect of Honda's car production and sales on consumption spending, private inventories, and overall GDP in 2019?

The correct option is B: increased; 2400; decreased; 3000; increased; 2400.

The Components of GDP

GDP (Gross Domestic Product) is the total value of goods and services produced within a country's borders in a specific time period. It is calculated using the formula: GDP = Consumption + Investment + Government Spending + (Exports - Imports).

Impact of Honda's Car Production

In 2019, Honda produced cars worth $3000 and sold cars worth $2400. This indicates that consumption spending increased by $2400 (the value of cars sold). However, private inventories decreased by $3000 (the difference between production and sales).

Overall GDP Calculation

Without knowing the values of investment, government spending, exports, and imports, we cannot determine the exact change in overall GDP. Since we only have information on consumption spending and private inventories, we know that GDP increased by $2400 (increase in consumption spending) and decreased by $3000 (decrease in private inventories). Therefore, the impact of Honda's car production on the economy in 2019 resulted in an increase in consumption spending and a decrease in private inventories, leading to an overall GDP increase of $2400.
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