GDP as a measure of economic welfare fails to account for certain factors, including nonmarket transactions, the underground economy, leisure, externalities, and the quality of the goods purchased. Considering this, which of the following are included in GDP calculations?cleaning services performed by Molly Maid Corporationlawn-mowing services performed by a neighborhood childdrugs sold illegally on a local street cornerprescription drugs manufactured in the United States and sold at a local pharmacya rug woven by hand in Turkeyair pollution that diminishes the quality of the air you breathetoxic-waste cleanup performed by a local companycar parts manufactured in the United States for a car assembled in Mexicoa purchase of 1,000 shares of IBM stockmonthly Social Security payment received by a retiree

4,7,8 and 9 would be included in GDP.

Answered: GDP as a measure of economic welfare…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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GDP as a measure of economic welfare fails to account for certain factors, including nonmarket transactions, the underground economy, leisure, externalities, and the quality of the goods purchased. Considering this, which of the following are included in GDP calculations?

cleaning services performed by Molly Maid Corporation
lawn-mowing services performed by a neighborhood child
drugs sold illegally on a local street corner
prescription drugs manufactured in the United States and sold at a local pharmacy
a rug woven by hand in Turkey
air pollution that diminishes the quality of the air you breathe
toxic-waste cleanup performed by a local company
car parts manufactured in the United States for a car assembled in Mexico
a purchase of 1,000 shares of IBM stock
monthly Social Security payment received by a retiree

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Gross Domestic Product (GDP)

gross domestic product = consumption + investment + government purchases + net exports

GDP = C + I + G + (X − M), calculate GDP using the expenditure approach.

Inventory investment	$50 billion
Fixed investment	$120 billion
Consumer durables	$420 billion
Consumer nondurables	$275 billion
Interest	$140 billion
Indirect business taxes	$45 billion
Government wages and salaries	$300 billion
Government purchases of goods and services	$110 billion
Imports	$80 billion
Exports	$40 billion
Profits	$320 billion
Services	$600 billion

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