GDP excludes expenditures by:?

Question

A. business on pollution control equipment
B. business for travel and entertainment
C. government on military hardware
D. consumers on used automobiles

please answer and explain. ty =]

Answer 1

B is the only answer I can se being correct because the expenditures are not spent on final goods and services. I am not entirely sure, but thats what I would go with.

Answer 2

The thing that GDP always measures is the "value added" to the economy and/or the multiplier effect. So GDP is a different animal than GNP which is more like a balance sheet of a company. GNP shows what the USA economy is worth just as a balance sheet shows what a company is worth. When you look up the GNP you will see two columns of numbers that equal each other. Just the assets count so that is the GNP. Some students make the mistake of adding the two togethor.

"Value Added" as described in your economic textboo,is a little too long for me to describe. It also morphs into the the "multiplier effect" of economics, which is also in your textbook. When you see GDP you know you are dealing with value added and/or the multiplier effect or in more simple terms growth of the economy.

Of the four choice all contribute to the GDP except A. A, anti-pollution equipment is an expense that gives no return to the company. Even though the company that sells the equipment benefits, since the company that bought the equipment did not experience any economic benefit but an economic loss, the two cancel each other out.

C does add to GDP because in economic theory government activity contributes to the multiplication principle and therefore C is part of GDP.

hope this helps

Answer 3

D The resale of previously produced goods does not GDP because GDP is a measure of the productions of good and services during the year. The car was counted in the year it was manufactured.