I am trying to do some homework for my econ class.I was wondering if College tuition, Social Security payments, and the purchase of a US treasury bond would be part of GDP (for the US). If they arent, why?
2007-11-30 07:24:18 · 2 answers · asked by Alina's Mommy 3 in Social Science ➔ Economics
Tuition is because you are purchasing a service. Any purchase of a good or service produced within the territorial United States goes into GDP. GNP has a slightly broader meaning and isn't used much anymore.
Purchasing a US Treasury bond is not part of GDP because no good or service was purchased, rather you loaned money you had and received a promise to have it repaid to you in the future. Cash changed hands, but no goods or services did.
Social Security payments are not part of GDP because they are a transfer payment between one set of citizens (workers) and another set of citizens (retirees). As such, no good or service was performed. Some of your money went to someone else. What they do with it may or may not become part of GDP, but the actual payment is not.
2007-11-30 09:28:05 · answer #1 · answered by OPM 7 · 0⤊ 0⤋
tuition: yes becasue you are consuming output that is being produced.
SS payments: no, but the purchases that recipients make with the SS payments are in GDP.
T-bonds: no, but purchases that the gvt makes (i.e. tanks and roads) with the proceeds are included.
2007-11-30 07:31:57 · answer #2 · answered by Homer J. Simpson 6 · 1⤊ 0⤋