Question

Which of the following are counted in this year's GDP? explain your answer in each case. explain each
a. Flashy Car Company sold a used car.
b. Juanita Jones cooked meals for her family.
c. IBM paid interest on its bonds.
d. Jose Suarez purchased 100 shares of microsoft stocks.
e. Bob Smith received a welfare payment.
f. Carriage realty earned a brokerage commission for selling a previously owned houses.
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

We are provided with a few transactions and we are asked which ones will be included while calculating the year's GDP. The transactions that will be included while calculating the GDP will be as under:

1. The company Flashy Car sold a used car will not be included in the GDP as the tax would have already been paid when the car was sold for the first time. To avoid multiple taxations this will not be included.
2. There are no money transactions taking place when a person is cooking food for her family. So even this transaction will not be included in the year's GDP.
3. When IBM is paying interest on the bonds there is a transaction of money taking place. So this transaction will be included while calculating the year's GDP.
4. When a person is buying shares there is a monetary transaction taking place. So this transaction will be included while calculating the year's GDP.
5. Welfare payment is a payment made to the socially weaker sections of society. As this is made for the social assistance of other people it will not be included in the calculation of the GDP.
6. The brokerage earned by Carriage realty will be included in calculating the GDP of the year as it involves a monetary transaction.
7. This transaction will be included in the GDP as it will come under Government spending as it is a monetary transaction.
8. Even though the environment gets polluted due to the increase in air and water pollution there is no monetary transaction taking place. So this transaction will not be included in the year's GDP.
9. Even in this rule being passed for the present, there is no transaction that has taken place. So this will not be included in the year's GDP.
10. Social security payment is a payment made to the socially weaker sections of society. As this is made for the social assistance of other people it will not be included in the calculation of the GDP.

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