Question

For each of the parts below, determine whether the transaction will contribute to nominal GDP this year. On the line at the end of each transaction write YES or NO. Answer each part of the question based only on the information provided (i.e. don’t make any additional assumptions). Consider each part independently. Provide support for your answer in the space below each part. 11A. (4 pts.) Last weekend you stopped at Home Depot and purchased some paint, then volunteered to paint the walls of your church: __________ 11B. (4 pts.) Three years ago year you purchased five sweatshirts at $20 each that say "Chicago Cubs - World Series Champions". Since they are not dated, after the Chicago Cubs win the World Series this year, you resell your sweatshirts to fans for $50 each: __________\

Answer 1

Step-by-step explanation:

11A. (4 pts.) Last weekend you stopped at Home Depot and purchased some paint, then volunteered to paint the walls of your church: NO

You must not include the service for painting the church walls because no one payed for it. But you must include the paint purchase in the GDP calculation, specifically in the consumption account.

11B. (4 pts.) Three years ago year you purchased five sweatshirts at $20 each that say "Chicago Cubs - World Series Champions". Since they are not dated, after the Chicago Cubs win the World Series this year, you resell your sweatshirts to fans for $50 each: YES

This must be included in the GDP, specifically in the consumption account because the sweatshirts were sold this year and not three-years ago.