The workers use the machines to turn the raw materials into cars. It's part of the flow across the lower half of the diagram. GDP counts only things that are paid for. The GDP is the sum of the price of each item times the number of that item sold, so the GDP changes when prices change, even without any change in real production. You can t do the separation perfectly, because different items prices change differently.
Prices don t all go up or down together in lock step.
A price index is an imperfect solution to separating real from price changes. Represents the buying pattern of the group for which the index is being designed. The consumer price index, the wholesale price index, the medical care component of the consumer price index, etc., have different market baskets. The consumer price index uses a market basket representing the average buying pattern of urban workers families. The wholesale price index s market basket represents the average buying pattern of businesses.