Which of the following are counted in this year’s GDP? Explain your answer in each case.?

Question

a. Flashy Car Company sold a used car.
b. Juanita Jones cooked meals for her family.
c. IBM paid interest on its bonds.
d. José Suarez purchased 100 shares of IBM stock.
e. Bob Smith received a welfare payment.
f. Carriage Realty earned a brokerage commission
for selling a previously owned house.
g. The government makes interest payments to persons
holding government bonds.
h. Air and water pollution increase.
i. Gambling is legalized in all states.
j. A retired worker receives a Social Security
payment.

Answer 1

GDP includes only the value of all final goods sold in the particular year. None of these would be included in GDP for the reasons listed below.
a. Only new cars. Used would have been included in the year that it was new.
b. No monetary value is placed on cooking for your family, or taking out the trash, or scrubbing the dishes. Not included.
c. Interest is not considered a form of spending for GDP calculations.
d. Transfer of use of money from one form to another. Not a purchase of a final good.
e. Transfer payments not included in GDP.
f. Used, not new house.
g. Interest payments. See c.
h. No monetary value. Not a final good.
i. This might increase GDP, but just legalizing it does not do so. Gambling at casinos is a service, and revenues would be included in GDP.
j. Transfer payment, not included in GDP.

Hope this helps.