Question

Which of the following transactions is included in Gross Domestic Product?

		Tips received by a waitress who reports them to the IRS
		A Social Security check received by a retired couple
		Sales of wheat used in making bread.
		A used textbook that one student gives another student in exchange for an iPod

The amount of income households receive after personal income taxes have been paid is known as

		disposable personal income.
		national income.
		personal income.
		gross domestic income.

Which of the following statements is true?

		GDP = GDI
		GDP = NDP
		GDP = NI
		GDP = PI

Answer 1

Tips received by a waitress who reports them to the IRS.

Explanation :

Tips received by a waitress who reports them to the IRS is included in GDP because it serves as a retail service which a waitress provides and it is included in the total national economic output and is thus included in GDP.

Personal income.

Explanation :

Personal income is defined as the amount of income household receive after personal income taxes have been paid. It implies total summation of all the household's received income.

GDP =GDI

Explanation :

GDP is always equal to GDI because in theory, GDP implies value of total things produced in an economy and GDI implies earning value of total things produced in an economy. Both the concepts concludes the same thing.