Final answer:
GDP includes the cost of hospital stays, child care by a licensed day care center, and new car sales as they represent market transactions and new production. Non-market activities, resale of goods, qualitative improvements, and intermediate goods are not included.
Step-by-step explanation:
Understanding Gross Domestic Product (GDP)
When determining what is included in the Gross Domestic Product (GDP), it is important to consider only the final goods and services produced within a country in a given year. Here's a breakdown of the items mentioned:
- a. The cost of hospital stays: Included in GDP as it is a service provided for payment.
- b. The rise in life expectancy over time: Not included in GDP as it is a qualitative improvement and not a market transaction.
- c. Child care provided by a licensed day care center: Included in GDP because it is a paid service.
- d. Child care provided by a grandmother: Not included in GDP as it is non-market household production.
- e. A used car sale: Not included in GDP because it is not a new production. GDP accounts only for new goods and services.
- f. A new car sale: Included in GDP as it is the sale of a new good.
- g. The greater variety of cheese available in supermarkets: Not included in GDP as variety itself is not a marketable good or service.
- h. The iron that goes into the steel that goes into a refrigerator bought by a consumer: Not included separately; only the final sale of the refrigerator is included as GDP accounts for final goods to avoid double counting.