Final answer:
GDP includes the cost of hospital stays, services from a licensed day care center, new car sales, and iron used in finished consumer products, while it does not include the rise in life expectancy, unpaid child care, used car sales, or the variety of cheese in supermarkets.
Step-by-step explanation:
Understanding GDP and Its Components
When evaluating what is included in the Gross Domestic Product (GDP), it’s important to consider only the economic activities that involve the production of new goods and services within a country in a given time period. For instance:
- The cost of hospital stays is included in GDP because it represents a service provided.
- The rise in life expectancy over time is not included since it is not a market transaction.
- Child care provided by a licensed day care center is included as it is a paid service.
- Child care provided by a grandmother is not included, as it does not involve a market transaction.
- A used car sale is not included, as it does not represent the production of new goods.
- A new car sale is included as it reflects the production of new goods.
- The greater variety of cheese available in supermarkets is not included as it does not specifically reflect a production level.
- The iron that goes into the steel that goes into a refrigerator bought by a consumer is included, as long as it is part of the inventory of finished goods sold to consumers.
All these components have implications on how the economic health of a country is assessed and understood.