Question

3. Which of the following are actually included in GDP and/or NI? If not counted, explain whether it should be, or simply cannot be. If it is counted, explain what kind of spending and/or what kind of income it is. (1 point each)

            a) Social security payments received by a retired factory worker.

            b) US government leases land for an army training center

            c) Ford motor company buying tires to put on its new cars.

            d) Wages paid to a domestic servant.

            e) The market value of a homemaker's services.

Answer 1

Excluded- Social security payments received by a retired factory worker. this is a transfer payment for which no service is rendered this year

Included- government leases land for an army training center. This will be considered as government spending so it is included in Gdp

Excluded- Ford motor company buying tires to put on its new cars. The tires which it manufactures are considered intermediate goods and only final goods which are ready for the final consumption are included in GDP

included- Wages paid to a domestic servant. It is a market transaction meaning it us bilateral payment servant is getting paid for the work he does so it will be included in Gdp.

Excluded- The market value of a homemaker's services. It is non market transaction so not included in Gdp