Assume an economy with two manufacturers: a parts and components manufacturer and
a tablet manufacturer. Suppose that parts and
components manufacturing does not require any
intermediate inputs. In a given year, the parts and
components manufacturer produces 50,000 units
of parts and components, of which 45,000 units
were sold to the tablet manufacturer at $100 per
unit and the remaining units were stored as inventory. In the same year, the tablet manufacturer
produces 25,000 tablets and sells all of them to
consumers at $800 per unit. Compute GDP of
this economy for the year using the product and
expenditure approaches. Do the two approaches
yield the same GDP?