1) Determine whether each of the following would be included in GDP, and explain
ID: 1253514 • Letter: 1
Question
1) Determine whether each of the following would be included in GDP, and explain why or why not.a) You buy a used CD from a friend.
b) You buy a new CD at a music shop.
c) You cook your own dinner.
d) You hire someone to cook your dinner.
2) Determine whether each of the following should be included in GDP as consumption, investment, or both, or neither. Explain your answer.
a) A landscaping company buys a new four-wheel-drive vehicle to carry bushes and flowers.
b) A doctor buys a new four-wheel-drive vehicle to use on vacation.
c) A family puts a new kitchen in their house.
d) The campus bookstore increases their inventory of textbooks.
e) You buy toothpaste at the drugstore.
f) The state government of Alaska buys four-wheel-drive vehicles for its game wardens.
Explanation / Answer
1) a) No. This is a used good, it has already been counted in the GDP when your friend bought it new; counting again when you bought it used would essentially double count it. b)Yes. It's new, and has been produced- no double counting. c) No. You didn't produce a good or service that was SOLD. d) Yes. Someone sold you a service. 2) a) Both- it is Consumption because the landscaper is buying something which had to be produced. It is Investment because it is meant for expanding his business. b)Consumption because the landscaper is buying something which had to be produced. c)Consumption because the landscaper is buying something which had to be produced. d)Investment. It is NOT consumption because they are not the end user(it will be consumption when individual students buy the books). It is investment because they are spending in order to expand there business. e)Neither. Government Purchase are not counted in the total GDP.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.