<p>In the expenditure measure of GDP <span class="math-container">$$Y = C + I + G + (X – M)$$</span></p>

<p>imports <span class="math-container">$M$</span> appear to reduce GDP.  However, this only offsets the consumption <span class="math-container">$C$</span> met by imports; if instead the money had not been spent on a Ferrari but had instead just been saved (and possibly lent abroad so it has no other effect on GDP) then GDP would have the same.   </p>

<p>There is a slight effect on GDP if a Ferrari dealership in the US was involved in the transaction: its margin (the final sale price minus the import cost) would count as value added in GDP and would appear in the expenditure measure since the consumption amount would exceed the import amount.</p>

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2019-02-17T14:48:16.170Z
2019-02-17T14:48:16.170Z
Henry
<p>Let's say the U.S. imports a brand new Ferrari that costs $600,000. I know that it would take away from the U.S. GDP since it's considered an import. However, if a consumer buys that Ferrari from the U.S., would it also add to the GDP (consumption) and cancel out the imports? What would happen if it just sat in U.S. warehouses unsold? Is it still adding to the GDP (investment) to cancel out with imports?</p>

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2019-02-17T11:53:35.257Z
GDP is the measure of final goods and services produced in a country.The imported good is assumed to have been 'consumed', and since Ferrari is not made in the importing country, its value is deducted from GDP. Even if the car sits in the inventory, the imports reduce GDP by its value. So, imports do not add to GDP.
london
<macroeconomics><gdp><international-trade><consumption>
How do imports affect GDP?
Hopper
# How do imports affect GDP?

(Asked by: username_0 on 2019-02-16)

Let's say the U.S. imports a brand new Ferrari that costs $600,000. I know that it would take away from the U.S. GDP since it's considered an import. However, if a consumer buys that Ferrari from the U.S., would it also add to the GDP (consumption) and cancel out the imports? What would happen if it just sat in U.S. warehouses unsold? Is it still adding to the GDP (investment) to cancel out with imports?

**Tags:** macroeconomics, gdp, international-trade, consumption
> **Comments:**
> **username_1**: GDP is the measure of final goods and services produced in a country.The imported good is assumed to have been 'consumed', and since Ferrari is not made in the importing country, its value is deducted from GDP. Even if the car sits in the inventory, the imports reduce GDP by its value. So, imports do not add to GDP.  

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## 1 answers

### Answer by username_2 on 2019-02-17. Score: 2

In the expenditure measure of GDP $$Y = C + I + G + (X – M)$$

imports $M$ appear to reduce GDP. However, this only offsets the consumption $C$ met by imports; if instead the money had not been spent on a Ferrari but had instead just been saved (and possibly lent abroad so it has no other effect on GDP) then GDP would have the same.

There is a slight effect on GDP if a Ferrari dealership in the US was involved in the transaction: its margin (the final sale price minus the import cost) would count as value added in GDP and would appear in the expenditure measure since the consumption amount would exceed the import amount.


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