Which of the following WOULD be counted in GDP? Baking a cake for a family gathering Buying some clothes at a garage sale Paying a local kid cash to cut your grass Hiring a professional to clean your home
Which of the following WOULD be counted in GDP? Baking a cake for a family gathering Buying some clothes at a garage sale Paying a local kid cash to cut your grass Hiring a professional to clean your home
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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![### GDP and Economic Activities: Understanding What’s Counted
#### Question:
Which of the following **WOULD** be counted in GDP?
- [ ] Baking a cake for a family gathering
- [ ] Buying some clothes at a garage sale
- [ ] Paying a local kid cash to cut your grass
- [x] Hiring a professional to clean your home
#### Explanation:
Gross Domestic Product (GDP) measures the total value of all goods and services produced within a country during a specific period. It includes various forms of economic activities that involve legitimate transactions and formal exchanges of goods and services.
- **Baking a cake for a family gathering:** This is a household activity and does not involve a market transaction. Hence, it is not included in GDP.
- **Buying some clothes at a garage sale:** Transactions involving second-hand goods such as those sold at garage sales do not contribute to GDP because they do not reflect production within the current period.
- **Paying a local kid cash to cut your grass:** Informal transactions without proper documentation and reporting are typically not included in GDP calculations.
- **Hiring a professional to clean your home:** This is a formal transaction that involves a market exchange of services and is included in the GDP calculation.
Understanding which activities contribute to GDP helps in grasping the broader scope of a country’s economic performance.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F37e2f913-30b2-4c8c-98d5-339163057ff1%2F368634bf-e7d5-469b-9289-4a14d29959ae%2Fvwe7kg_processed.jpeg&w=3840&q=75)
Transcribed Image Text:### GDP and Economic Activities: Understanding What’s Counted
#### Question:
Which of the following **WOULD** be counted in GDP?
- [ ] Baking a cake for a family gathering
- [ ] Buying some clothes at a garage sale
- [ ] Paying a local kid cash to cut your grass
- [x] Hiring a professional to clean your home
#### Explanation:
Gross Domestic Product (GDP) measures the total value of all goods and services produced within a country during a specific period. It includes various forms of economic activities that involve legitimate transactions and formal exchanges of goods and services.
- **Baking a cake for a family gathering:** This is a household activity and does not involve a market transaction. Hence, it is not included in GDP.
- **Buying some clothes at a garage sale:** Transactions involving second-hand goods such as those sold at garage sales do not contribute to GDP because they do not reflect production within the current period.
- **Paying a local kid cash to cut your grass:** Informal transactions without proper documentation and reporting are typically not included in GDP calculations.
- **Hiring a professional to clean your home:** This is a formal transaction that involves a market exchange of services and is included in the GDP calculation.
Understanding which activities contribute to GDP helps in grasping the broader scope of a country’s economic performance.
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