ABC Computer Company has a $20,000,000 factory in Kanata. During the current year, ABC builds $2,000,000 worth of computer components. ABC's costs are labour, $1,000,000; interest on debt, $100 000; and taxes, $200 000.
ABC sells all its output to XYZ Supercomputer. Using ABC's components, XYZ builds four supercomputers at a cost of $800 000 each ($500 000 worth of components, $200 000 in labour costs, and $100 000 in taxes per computer). XYZ has a $30,000,000 factory. XYZ sells three of the supercomputers for $1,000,000 each; at year's end, it has not sold the fourth. The unsold computer is carried on XYZ's books as an $800,000 increase in inventory.
a. Calculate the contributions to GDP of these trans-actions, showing that all three approaches give the same answer.
b. Repeat part (a), but now assume that in addition to its other costs, ABC also paid $500,000 for imported computer chips.