24. (This is a "trick question." Think hard about it.) You have decided to live off of nature. You cut downan old dead tree and use the wood to make a small canoe for yourself. Then you fashion a fishing rodfrom some old wire and an old hook. You dig up worms to use as bait, and you catch two fish and cookthem for your dinner. Based on all these activities, how much did GDP change?a. GDP rises by the market value of the canoe, the fishing rod, and the fish.b. GDP rises by the market value of the fish only.c. GDP does not change.d. GDP rises by the value of the canoe because it is a durable good.

Answered: 24. (This is a "trick question." Think…

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter17: Production And Growth

Section: Chapter Questions

Problem 5CQQ

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Step 1: Introduction:

GDP stands for gross domestic product and is defined as the total value of the final goods and services produced in an economy over a certain period of time. By this logic, GDP could mean the total value of final goods, or total expenditure on the production of final goods and services or even the total income earned from the sale of final goods and services. GDP is one of the most widely used measures of economic growth. There are three main methods to calculate GDP:

Income Method: Here, the GDP is calculated to be the total income earned from the sale of final goods and services.
Expenditure Method: Here, the GDP is calculated to be the total expenditure on the production of final goods and services.
Production Method: Here, the GDP is calculated as the market value of all goods and services produced within an economy.

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