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Which of the following would be classified under C when calculating GDP? A. A homeowner mowing...

Question:

Which of the following would be classified under C when calculating GDP?

A. A homeowner mowing her own lawn

B. $40.00 spent eating out at a restaurant

C. The purchase of new computer software by an accounting firm

D. Flour purchased by a baker to make donuts

E. Donating clothing to charitable causes

Gross Domestic Product:

Gross Domestic Product (GDP) is the final dollar value of goods and services produced by an economy over a time frame - generally a year. The total GDP is found by adding C(onsumption) by consumers plus I(nvestment) by business plus G(overnment) spending plus the net of eX(ports) - iM(ports).

Answer and Explanation:

Which of the following would be classified under C when calculating GDP?

A. A homeowner mowing her own lawn No, unpaid work is not included in GDP.
B. $40.00 spent eating out at a restaurant Yes, this is "C" for the Consumption portion of GDP.
C. The purchase of new computer software by an accounting firm No, this is under "I" for Investment by businesses.
D. Flour purchased by a baker to make donuts No, the donuts are included in GDP, but the flour is not because it is not a final good.
E. Donating clothing to charitable causes No, donations are not part of GDP because they involve the transfer of used items.

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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