If a car is sold by Ford to a family in 2021 that was manufactured in 2020, how does it affect GDP?

When a car is sold by Ford to a family in 2021, it is counted as part of the consumption component of GDP for that year. GDP measures the total monetary value of all final goods and services produced within a country's borders in a specific time period, typically on an annual basis.

In this case, even though the car was manufactured in 2020, the GDP calculation for the year 2021 will include the sale of the vehicle. This is because GDP is concerned with the timing of transactions and consumption, not just production. When the family purchases the car in 2021, that transaction constitutes consumption, which directly contributes to the GDP for 2021.

The car's production in 2020 does not have an impact on the 2021 GDP because it was already counted when the car was produced and accounted for in the GDP of that year. Thus, the sale in 2021 increases consumption, which in turn increases the GDP for 2021, reflecting the economic activity that occurs when consumers purchase goods. Therefore, this choice correctly indicates the relationship between the sale, consumption, and GDP for the respective years.