Question

Which of the following would NOT be considered an addition to the capital cost of an asset?

a. HST paid on the asset
b. insurance paid when the asset was in transit from the supplier
c. installation fee when asset is delivered
d. freight costs paid by the purchaser

Answer 1

GDP includes the value of goods and services produced in a country, such as hospital costs and new car sales, while it excludes non-market activities, second-hand sales, and product variety improvements.

Step-by-step explanation:

The cost of hospital stays, child care provided by a licensed day care center, a new car sale, and the iron that goes into the steel that goes into a refrigerator bought by a consumer are all included in the Gross Domestic Product (GDP). On the other hand, the rise in life expectancy over time, child care provided by a grandmother, a used car sale, and the greater variety of cheese available in supermarkets are not included in the GDP calculations. GDP measures the total value of goods and services produced within a country's borders in a specific time period and these exclusions pertain to non-market transactions, second-hand sales, and quality/varieties which do not have a direct market transaction value.