Question

What is excluded from GDP? Describe these types of goods.​

Answer 1

GDP excludes intermediate goods, non-market activities, underground economy, and financial transactions.

Step-by-step explanation:

GDP, or Gross Domestic Product, is a measure of the total value of goods and services produced within a country's borders during a specific time period. However, there are certain things that are excluded from GDP calculations:

1. Intermediate Goods: These are goods that are used in the production of other goods and are not sold directly to consumers. For example, the steel used to make a car would be an intermediate good.
2. Non-Market Activities: These are activities that are not exchanged for money in the market. Examples include household chores, volunteer work, and do-it-yourself repairs.
3. Underground Economy: This refers to economic activities that are not reported to the government and are thus not included in official GDP calculations. Examples include illegal activities, like drug trafficking, and informal activities, like street vending.
4. Financial Transactions: Certain financial transactions, such as buying and selling stocks, bonds, and real estate, are not counted in GDP. This is because these transactions involve the transfer of ownership, rather than the production of goods and services.