For each of the following activities, please state \"yes\" if this activity shou

Question

For each of the following activities, please state "yes" if this activity should be included (according to the definition of GDP) in the year 2017 Gross Domestic Product for the United States or "no" if this activity should be not included (according to the definition of GDP) in the year 2017 Gross Domestic Product for the United States. For each of your answers please explain why you said "yes" or why you said "no".

(a) The new car built by Ford in its Toronto Canadian plant in 2018 but not sold until 2019.

(b) The new car built by Ford in its Michigan plant in 2017 but not sold until 2018.

(c) The $300 million Starbucks paid for coffee cups manufactured in the U.S.A. in 2017.

(d) The $60,000 Maria, living in California, put into her retirement account in 2017.

(e) The $300 paid to a car repair shop located in Los Angeles, CA in 2017 for a tune up.

Explanation / Answer

a) As the car was build in Canada it will not be included in the US GDP. No.

b) Yes, It will be part of inventory and it doesn't matter it was sold or not. It will be included in the GDP of the year 2017.

c) No, Coffee cups are the intermediate goods the final product is the coffee sold by Starbucks. Intermediate goods are not included in the GDP.

d) NO, it was included in the GDP in the year when it was earned. Any transfer will not be included in the GDP.

e) Yes, its a service availed by the consumer so it will be included in the GDP.

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