Question

Which of the following transactions would not be counted in GDP? Explain your answer.

1. G.M. builds a new auto plant
2. Janet inherits $100,000 from her Mom
3. Walmart buys add additional inventory
4. You lose the lottery
5. You buy 5 quarts of oil and change the oil in your car
6. You receive a raise at work
7. Ford buys steel frames to make cars
8. You make $200 at your garage sale

Answer 1

Following transactions will not be counted to the GDP as follows:

1. Janet inherits $100,000 from her Mom

The inheritance of $100000 is not considered as income, rather this money belonged to her mom and her income is already considered as a part of GDP.

2. You lose the lottery

Lottery is the channelization and pooling of funds. but, it is not a productive activity. Hence, ti will not be considered to be counted as GDP.

3. Ford buys steel frames to make cars

Steel frames are intermediate products, that will be used to build cars as finished products. But, intermediate products are not considered to be the part of GDP. Only value of finished products will be added to the GDP. So, steel frames as intermediate products are not the part of GDP.

4. You make $200 at your garage sale

Garage construction is already considered as a part of GDP in the past. So, revenue generated from the sale, will not be counted as GDP.