Question

The gross domestic product (GDP) of the United States is defined as the all in a given period of time.

Based on this definition, indicate which of the following transactions will be included in (that is, directly increase) the GDP of the United States in 2017.

a. Roadway Motors, a U.S. automobile company, produces a convertible at a plant in Germany on March 10, 2017. Roadway Motors imports the convertible into the United States on May 20, 2017.
b. Zippycar, a U.S. automobile company, produces a convertible at a manufacturing plant in Minneapolis on January 21, 2017. It sells the car at a dealership in Houston on February 10, 2017.
c. Sofaland, a Swedish furniture company, produces a table at a plant in Virginia on December 5, 2017. It sells the table to a college student on December 24.
d. You chop down a cherry tree on your property in California and make a dining room table in 2017. A similar table sells for $800 in a local furniture store.
e. Rotato, a U.S. tire company, produces a set of tires at a plant in Michigan on September 13, 2017. It sells the set of tires to Speedmaster for use in the production of a two-door coupe that will be made in the United States in 2017.

Answer 1

Step-by-step explanation:

1. Excluded.

Reason: The production has taken place outside the boundary of the country, so it is not included in the GDP of US

2. Included.

Reason: The production has taken place within the boundary of the country, so it is included in the GDP of US

3. Included.

Reason: The production has taken place within the boundary of the country, so it is included in the GDP of US

4. Excluded.

Reason: The table was not created for selling purpose in the market. It was done as hobby and hobbies are not included in national income

5. Excluded.

Reason: The product was sold as a raw material to other firm, therefore, it is not included in the GDP of the US