Indicate whether each of the following actions or impacts would increase GDP.
a. An individual purchases bottled water to avoid a contaminated municipal water supply.
b. An individual obtains her drinking water from a water fountain at her workplace to avoid a contaminated municipal water supply.
Gross Domestic Product:
The summed up amount of expenditures in a nation is collectively referred to as the Gross Domestic Product (GDP) of a nation. The GDP also includes the costs of imports as well as exports in the country.
Answer and Explanation:
a. TRUE: As, if an individual will buy a water bottle from a market, this will increase the overall income to a infinitesimally small extent, thus increasing the GDP.
b. FALSE: As, if the drinking water is obtained from a self-source like a water fountain at the workplace, this would not effect the GDP.
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from Economics 102: MacroeconomicsChapter 5 / Lesson 6