Calculate GDP in the following economy.

ABC Computer Company has a $20, 000, 000 factory in Silicon Valley.

During the current year ABC builds $2, 000, 000 worth of computer components.

ABC's costs are labor, $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 labor 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; but at the end

of the year, it had not sold the fourth. The unsold computer is carried on

XYZ's books as an $800, 000 increase in inventory.

(a) Calculate the contribution to GDP of these transactions using the

product, income, and expenditure approaches, showing that all three

approaches yield 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.