Question

The circulation of GDP would include

A. profits on the sale of a 25 year old house
B. The monetary value of someone babysitting in exchange for a room
C. the income of a high school economics teacher
D. the price of the steel to build a new hotel

Answer 1

Hospital stays, paid child care, new car sales are part of GDP. Changes in life expectancy, used car sales, variety of cheese in supermarkets, and iron in steel used to make consumer goods are not included in GDP. Correct option is B.

Step-by-step explanation:

a. Hospital stays are part of GDP.

b. Changes in life expectancy are not market transactions and not part of GDP.

c. Child care that is paid for is part of GDP.

d. If Grandma gets paid and reports this as income, it is part of GDP, otherwise not.

e. A used car is not produced this year, so it is not part of GDP.

f. A new car is part of GDP.

g. Variety does not count in GDP, where the cheese could all be cheddar.

h. The iron is not counted because it is an intermediate good.