Question

Question 5

What is included when measuring a country's gross domestic product (GDP)?
O A) a homeowner's cost of labor when performing his or her own repairs
B) a consumer's purchase of a new bicycle
O C) a consumer's purchase of clothes at a second-hand store
O D) a car manufacturer's purchase of tires for the production of a new car

Answer 1

Answer: B) a consumer's purchase of a new bicycle

Step-by-step explanation:

Gross Domestic Product is the dollar amount of the final goods and services in a country in a year. It includes on the final amounts of goods and services which means that it does not account for intermediate goods such as tires being purchased for a new car. It will instead include the price of the new car.

A consumer's purchase of a new bicycle would be included because this represents a final good. Second-hand goods are not to be counted because it is assumed that they have been counted by the GDP in the year they were produced.