Indicate whether each of the following actions or impacts would increase GDP.
a. A homeowner pays a lawn-care company for landscaping services.
b. A neighbor agrees to help a homeowner with landscaping work in exchange for assistance with plumbing work.
Gross Domestic Product:
The Gross Domestic Product reflects the overall expenditures that are involved in a nation including any external expenditures like import of goods. It also involves the production cost.
Answer and Explanation:
a. TRUE: As, in this case, the expenditure is done by the homeowner and the amount is transferred to a particular company, this will increase the overall GDP to some extent.
b. FALSE: As, in this case, the homeowner is being helped by his neighbour, thus no external company is involved, hence, the GDP will not be affected.
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Learn more about this topic:
from Economics 102: MacroeconomicsChapter 4 / Lesson 3