Question

Using the definition of GDP determine whether the following economic activities would be included (I) in GDP or excluded (E). a. ____ the sale of a stock b. ____ the sale of a home owned by Mr. Jones c. ____ the government builds a new office building d. ____ the purchase of a crane by a construction company e. ____ a factory that was built to replace one destroyed in a fire.

Answer 1

Answer: 1. Excluded

2. Excuded

3. Included

4. Included

5. Included

Step-by-step explanation:

The gross domestic product is a measure of the monetary value of all business/economic activities happening within a country at a particular point in time. Factors measured in GDP include; expenditures, income, investments, and exports.

I. The sale of a stock is not an investment expenditure in GDP. It is rather seen as a Saving.

II. The sale of a home owned by Mr. Jones is a used product. This house might have been counted in a previous year's GDP.

III. When the government builds a new office building, it can be counted as government expenditure which is a component of GDP.

IV. The purchase of a crane by a construction company is an example of a business investment and can be seen as a component of GDP.

V. A factory that was built to replace the one destroyed in a fire would be regarded as a business investment.