Which of the following is not counted in GDP?
The answer is 5, both C and D. Purchase of Wal-Mart stock is not related to the production of final goods and services. D was counted in the year it was built. To avoid double counting, it is not counted again in the year of purchase.
What is NOT counted in the GDP?
Which of the following 8 items is NOT counted in the gross domestic product (GDP)? A) Flour bought by a housewife B) Gardening done by a homeowner C) The purchase of a newly built home D) Capital gains on the sale of your house E) Net interest paid by businesses to households F) Social Security payments paid to professors G) Morphine administered by doctors to cancer patients H) Gambling in certain counties in Atlantic City I) Flour bought by a bakery J) Dog walked by paid "Dog Walkers" in NYC K) The purchase of an existing home L) Net interest paid by the Federal government to households M) Private pensions paid to professors N) Wages paid to professors O) Oxycontin purchased by prescription at a pharmacy P) The purchase of cigarettes by a person over 21 Please remember only EIGHT (8) items. I'd really appreciate it thanks!!!!
What is and isn't counted as part of GDP?
I have a question on what is and isn't counted as part of the GDP: Consider the following example: 1) A man pays $10 for a haircut at supercuts 2) A man receives a haircut from his wife, who values the haircut at $10 3) A man receives a haircut from a student at a haircut training center for $7 I know that black market activity, "household services," and used goods aren't counted as part of the GDP - so that rules out choice 2. I know choice 1 is part of the GDP for sure...am I correct in saying that choice 3 is too? Appreciate the help, Thanks
How do you count GDP?
To begin, GDP in a given period is tabulated in the prices/costs actually incurred in that period, representing “nominal” or current period $ GDP. As a separate process, organizations collect current period pricing/cost for samples of product categories such as food, electricity, medical, electronic equipment, etc. These current period unit prices (I use 2017 in examples) are compared with base period unit prices - the U.S. Bureau of Economic Analysis (BEA) just shifted to using 2012 as base year. If in 2017 electricity cost $.10 per kilowatt hour and $.09 in 2012 and in 2017 total expenditures on electricity were $100 billion, the real 2017 GDP would be computed as ($100/($.10/$.09)) or $90 billion. If a smartphone costing $500 in 2012 declined in price to $450 in 2017 and new features available in 2017 were worth $30, the real GDP for a total of $100 billion spent on smartphones in 2017 = $100/(($450–$50)/$500), or $119 billion. Physically, the 2017 buyers of smartphones received more for their money because of unit price deflation and qualitative additions. New features need to be substracted to make comparisons like for like. Unlike the first example in which buyers paid more in 2017 for a given physical amount of electricity than they would have in 2012 because of unit price inflation, today in many technology areas unit pricing is deflating, so what $100 billion bought in 2017 would have cost more in 2012 prices. Whether unit prices are going up or down, real GDP highlights physical implications of change across time: for example consumption of labor, distribution effort and user physical benefit. Current period pricing highlights financial impact, often important in comparison to fixed commitments (rent, loan payback, consumer fixed incomes).
The value of which of the following would be counted as GDP?
a new car sold by a car dealer. auto workers hired by a car manufacturer. Is wrong because the mere act of hiring someone does not increase output. a used car sold by a car dealer. Again, there is no additional output for the economy from this. However, the profit earned by the dealer and commission earned by the sales people is part of GDP when calculated with the income approach. a share of stock in a car manufacturer This is a financial invetment that does not, by itself, increase an economy's output.
Which would not be included in GDP?
A. the purchase of 100 shares of a microsoft stock B. the replacement of a muffler on a 1978 chevy C. the commission charged by a real estate agent D. services of a hair stylist E. tuiton fees for a course Also, which group is most hurt by unanticipated inflation social security recipients, workers with cost of living adjustment clauses in their labor contracts, or workers who sign new work agreements every day And one more: if the labor force rises and the number of unemployed stayed the same, the unemployment rate would: stay, rise, or fall?
Do second-hand sales add to a country's GDP? Why or why not?
Yes they certainly do, provided that the sale is being mediated by a business in the formal economy. GDP is the total value of all goods and services produced in the economy over any given period of time. Businesses that buy in things for resale are providing the service of linking the sellers of these things to the end buyers of these things. It doesn’t matter whether the things being bought and resold in this way are new or second hand. Take the example of a motor dealer buying and selling both new and second cars. If this dealer buys in a car for $10,000 and resells it after a few weeks for $12,000, then the “value added” by this business on this transaction would be $2,000 and that $2,000 would be the contribution of the business to the economy’s GDP stemming from that particular transaction. Whether the vehicle that was bought and sold is new or second hand makes no difference. The business performed the service of providing a market to the seller, taking the vehicle into stock, holding it for a period of time and then making it available to a willing buyer. Likewise, second hand cloths shops are contributing to GDP in the exact same way as upmarket fashion stores. The value added by the motor dealer, clothes retailer etc in these examples is analogous to the the value added by all wholesalers and retailers in an economy. The sum of all these additions of value from the start of the chain to the end of the chain, in producing goods and services for final consumption, makes up the total GDP of the economy.However, GDP figures do not capture all such transactions and their embrace tends not to extend beyond what would be broadly regarded as the formal economy. If I have had a car for say 5 years and decide to sell it myself to another private buyer rather than through a motor dealer, then although I might be saving myself some money by adding the value of finding a buyer myself, this would nonetheless be a once off transaction and not for inclusion in the national GDP figure. If I buy in a few cars every year, hold them in my back yard and supplement my “day job” income by trying to turn a profit on them, this activity will also tend to stay out of the GDP figures unless I am declaring the relevant revenues for tax purposes.
Would the following be counted in GDP?
If so, explain how it enters GDP (C,I,G, or (X-M)) and why. If not, explain why not. A. Nabisco's purchase of flour to make cookies for your study group. B. Your purchase of flour to make cookies for your study group. C. The pentagon's purchase of flour to make cookies for soldiers. D. Nabisco's purchase of an oven to bake cookies. E. Your purchase of Hungarian hazelnuts to put in your cookies. I do not know if I am correct or not for a few of them. I am really confused. Can anyone help me? Thank you in advance!
What is considered part of GDP?
The following question tests your knowledge of what activities are included in calculating GDP. Decide for each item whether it is part of GDP, and if so, to which expenditure category it belongs. 4.1. The purchase of electricity by a family is: A. Counted as part of net exports B. Counted as part of government purchases C. Counted as part of investment D. Counted as part of consumption E. Not counted in GDP 4.2. The purchase of electricity by a shoe store is: A. Counted as part of net exports B. Counted as part of government purchases C. Not counted in GDP D. Counted as part of consumption E. Counted as part of investment
Why aren't intermediate products counted as part of GDP?
First of all, terms to know:-Intermediate goods- Goods which are used up during the process of production of other goods.Final goods- Goods which do not undergo any firther transformation in the production process.Gross Domestic Product (GDP)- It measures the aggregate production of final goods and services taking place within the domestic economy during a year.Surely intermediate goods are crucial inputs to any production proceess and a significant part of our manpower amd capital stock are engaged in production of these goods. However, since we are dealing with value of output, we should realise that the value of the final goods already includes the value of the intermediate goods that have entered into their production as inputs. Counting them separately will lead to the error of double counting. Whereas considering intermediate goods may gove a fuller description of total economic activity, counting them will highly exaggerate the final value of our economic activity.