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Which of the following will have an effect on GDP? A. You lose $20 betting with a friend. B. You...

Question:

Which of the following will have an effect on GDP?

A. You lose $20 betting with a friend.

B. You fix your sister's car without buying any new parts.

C. Your mother's firm makes computers and exports them to China.

D. You buy 3,000 shares of stock in a corporation.

E. Your wealthy aunt buys a painting by Picasso.

GDP:

Gross domestic product indicates the total value of goods and services produced within an economy. GDP is also equal to the total income earned by individuals working in the same economy, in the form of wage and salaries, profit and capital income.

Answer and Explanation:

The answer is C).

An activity affects GDP only if it produces a new good or services for the market. In this question, when your mother's firm produces computers, it represents new production of computers, and thus adds to GDP. The fact that the computers are exported to China implies that it would show up as exports in the national income and product accounts.

A) does not involve production, but a mere transfer from one to another. B) represents production that is not market-based, and hence is not included in GDP. D) and E) represent the transaction goods already produced, and hence do not affect GDP.


Learn more about this topic:

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Gross Domestic Product: Definition and Components

from Economics 102: Macroeconomics

Chapter 4 / Lesson 3
63K

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