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Chapter 11: Problem 4

Which of the following are included in the calculation of this year's GDP? a. Twelve-year-old Bobby mowing his family's lawn c. Barbara Wilson buying 100 shares of Chrysler Corporation stock d. Stephen Sidwhali's receipt of a Social Security check e. An illegal sale at the corner of Elm and Jefferson

Short Answer

Expert verified
Based on these analyses, none of the given options are involved in the calculation of this year's GDP.

Step by step solution

01

Identify Market Transactions

A market transaction implies a trade or exchange between two parties for a product or service. From the given options, the only potential market transaction could be option (e): an illegal sale at the corner of Elm and Jefferson.
02

Identify the Legitimacy of the Transaction

Although option (e) may seem like a market transaction, it is illegal and thus not included in GDP.
03

Eliminate Non-Market Transactions

Option (a) is a non-market transaction because it is a service provided within a family without any exchange of money. Therefore, it does not count towards the GDP. Similarly, option (d) Stephen Sidwhali's receipt of a Social Security check is also a non-market transaction as it is a transfer payment from the government to individuals and does not involve the production of goods and services.
04

Eliminate Stock Transactions

Option (c) involves the purchase of stocks which is a financial transaction and does not involve the actual production of goods or services, hence it is not counted in GDP.

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Most popular questions from this chapter

Why is import spending subtracted from the sum of consumption, investment, government purchases, and export spending in computing GDP?

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An economist wants to know whether the "average person" in country \(\mathrm{X}\) has more goods and services to consume than the "average person" in country \(Y\). Do you recommend that the economist look at per capita GDP or per capita real GDP? Explain your answer.

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