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Michigan Cranberry Company sold $10 million worth of cranberries it produced. In producing cranberries, it purchased $1 million dollars worth of supplies from foreign countries and paid workers who reside in Canada but commute to the U.S. $1 million. How much did these transactions add to U.S. GDP?

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Answer:

The answer is: $9 million

Explanation:

The gross domestic product includes all the final and legal goods and services produced in an economy during one year.

Michigan Cranberry produced $10 million worth of cranberries, but in doing so, it imported $1 million worth of supplies from other countries. Cross border labor is included in the GDP.

The net addition of Michigan Cranberries to the US GDP is: $10 million - $1 million (imported supplies) = $9 million

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