
The items included in the calculation of the

Answer to Problem 1KC
Option 'e' is correct.
Explanation of Solution
The Gross Domestic Product is the sum total of the money values of all the goods and services produced within the political boundary of an economy within a specific period of time which is usually one financial year. The money value of all the final goods and services that are produced within the economy will be summated in order to calculate the GDP.
Option (e):
The GDP calculation includes the monetary value of all the final goods and services produced within the economy in the financial year only. Since the value of the used car is already included in the GDP calculation of the year in which it was produced, it will not go for double entry. The Apple stocks are not considered as the services and are also not included. The homemaker's services are also not included in the GDP calculation and also the same idea of the used car is applied on the Gulf war military surplus sale which means none of the given is included in the GDP calculation and that means option 'e' is correct.
Option (a):
The current exchanges in the stocks and bonds, the government security and welfare payments etc are not included in the GDP calculations. This means that the purchase of 100 shares of Apple stock is a financial asset and not a newly produced good. This means that the transaction is not included in the GDP calculation and that makes option 'a' incorrect.
Option (b):
One product will be counted for only once in the GDP calculation and that means when there is a resale of the product, it will not be accounted for the GDP calculations. Thus, the value of the car will be included in the year in which it was produced and that means the resale will not be accounted for GDP and therefore, option 'b' is incorrect.
Option (c):
The Homemaker's services are not easily valued because they do more than the accountable work of the maid. They do such works without any remuneration and that means the work is an unpaid and nonmarket transaction which makes the inclusion of the homemaker's services not possible in the GDP calculation and thus are not included. This means that the option 'c' is also incorrect.
Option (d):
Since gulf war military surplus is not produced in the year and is already accounted for the year in which they were produced, just like the sale of the used car, it will not be included in the GDP calculation. Thus, option 'd' is incorrect.
Gross Domestic Product: The GDP is the sum total of the money value of all the final goods and services produced within the political boundary of a country within the financial year.
Want to see more full solutions like this?
- M” method Given the following model, solve by the method of “M”. (see image)arrow_forwardAs indicated in the attached image, U.S. earnings for high- and low-skill workers as measured by educational attainment began diverging in the 1980s. The remaining questions in this problem set use the model for the labor market developed in class to walk through potential explanations for this trend. 1. Assume that there are just two types of workers, low- and high-skill. As a result, there are two labor markets: supply and demand for low-skill workers and supply and demand for high-skill workers. Using two carefully drawn labor-market figures, show that an increase in the demand for high skill workers can explain an increase in the relative wage of high-skill workers. 2. Using the same assumptions as in the previous question, use two carefully drawn labor-market figures to show that an increase in the supply of low-skill workers can explain an increase in the relative wage of high-skill workers.arrow_forwardPublished in 1980, the book Free to Choose discusses how economists Milton Friedman and Rose Friedman proposed a one-sided view of the benefits of a voucher system. However, there are other economists who disagree about the potential effects of a voucher system.arrow_forward
- The following diagram illustrates the demand and marginal revenue curves facing a monopoly in an industry with no economies or diseconomies of scale. In the short and long run, MC = ATC. a. Calculate the values of profit, consumer surplus, and deadweight loss, and illustrate these on the graph. b. Repeat the calculations in part a, but now assume the monopoly is able to practice perfect price discrimination.arrow_forwardThe projects under the 'Build, Build, Build' program: how these projects improve connectivity and ease of doing business in the Philippines?arrow_forwardhow utillity relate to microeconomics ?arrow_forward
- How Command Economics Relate to Principle Of Economics?arrow_forwardhow commond economies relate to principle Of Economics ?arrow_forwardCritically analyse the five (5) characteristics of Ubuntu and provide examples of how they apply to the National Health Insurance (NHI) in South Africa.arrow_forward
- Survey of Economics (MindTap Course List)EconomicsISBN:9781305260948Author:Irvin B. TuckerPublisher:Cengage Learning





