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Indicate whether each of the following actions or impacts would increase GDP. a. A homeowner...

Question:

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.


Learn more about this topic:

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Gross Domestic Product: Definition and Components

from Economics 102: Macroeconomics

Chapter 4 / Lesson 3
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