Question

Suppose that instead of cooking dinner for an hour, you decide to work an extra hour, earning an additional $15.

You then purchase some (takeout) Chinese food, which costs you $10.

a. By how much does measured GDP increase?

Answer 1

Solution

a) In this case the GDP will increase by

$$10+12=22$

In this scenario, the final goods is mixed with the income approach to come up with the GDP.

This is calculated by assuming that the $12 per hour of work creates a final good worth $12. 

=$22