Question

Which of the following is excluded in the calculation of Gross Domestic Product (GDP) for the...

Which of the following is excluded in the calculation of Gross Domestic Product (GDP)
for the U.K.?


a) A firm in London making wage payments to a Japanese citizen.
b) A Canadian bank making wage payments to a U.K. citizen.
c) A dental hospital in London charging treatment fee from a Chinese citizen.
d) All of the above.

Explain your answer.

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Homework Answers

Answer #1

The value of goods or services produced within a domestic territory of a Nation is included in GDP calculation of that nation. It doesn't matter whether it is produced by citizen of that country or by a foreigner.

If production occurs within domestic territory of a Nation, then only it will included in GDP calculation.

Note: if goods or services produced by a citizen of a UK outside the domestic boundary of UK (or in foreign land) then it will be not included in GDP calculation of UK.

The payment to a citizen of UK by a Canadian bank would not a part of GDP calculation.

So, the correct answer is an option (b).

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