Final answer:
The purchase of a haircut is included in GDP, which accounts for all goods and services produced within a country. To find the GDP of Country A, sum up consumption, government purchases, investments, and net exports (exports minus imports), which equals $3,030 billion.
Step-by-step explanation:
The purchase of a haircut is included in the Gross Domestic Product (GDP). GDP measures the total value of all goods and services produced over a specific time period within a country's borders. It includes all private and public consumption, government outlays, investments, additions to private inventories, paid-in construction costs, and the foreign balance of trade (exports are added, imports are subtracted). GDP includes: The cost of hospital stays, Child care provided by a licensed day care center, A new car sale, The refrigerator bought by a consumer, indirectly including the materials used such as steel and iron.
GDP does not include: The rise in life expectancy over time, Child care provided by a grandmother (unpaid work), A used car sale, The greater variety of cheese available in supermarkets (this is considered a non-monetary transaction). To calculate the GDP using the expenditure approach for Country A, add together consumption spending, government purchases, business investment, and net exports (exports minus imports). The formula is: GDP = Consumption + Government Spending + Investment + (Exports - Imports). Country A's GDP = $2,000 billion (consumption) + $1,000 billion (government purchases) + $50 billion (business investment) + ($20 billion (exports) - $40 billion (imports)) = $3,030 billion.