Question

Which of the following counts towards Australia's GDP?

		Packaging machines in a factory depreciate.
		Bob's grandma receives pensions from the government every month.
		A criminal sells drugs on the black market.
		Zach sells his second-hand car to Victoria without earning profits.

Answer 1

None of them will be included in GDP

reason:

1. Packaging machines in a factory depreciate.

Depreciation is not cocnsidered in GDP. It is considered only while calculating NDP. (Net Domestic Product - Net means after deducting depreciation)

2. Bob's grandma receives pensions from the government every month.

Pension is transfer payment. It will not be included in GDP. Only the government spending on goods and services
is counted in GDP.

3. A criminal sells drugs on the black market.

Underground economy is not covered under GDP. This is most probably a cash transaction It will not be counted in
GDP.

4. Zach sells his second-hand car to Victoria without earning profits.

First, the second-hand car was already included in GDP when it was new. Second, there is no value added to the
car. So, the resale of the second-hand car is not counted under GDP.