Question

The following are true/false questions:

1) New tires purchased today by Jack from Big O tires store to put on his used Corvette are considered a final good and will be included in 2019 GDP.     True or False

2) The value of the sale of new doors by home Depot to a construction company that is building new homes which will be completed and sold in 2019 will be included in 2019 GDP as an intermediate good.   True or False

3) The commission, $1,500, earned today by a stockbroker on the sale of her client's stocks that are valued at $50,000 will not be part of 2019 GDP. True or False

Answer 1

(1). New tires purchased today by Jack from Big O tires store to put on his used Corvette are considered a final good and will be included in 2019 GDP.

True. As, it is a final good and not an intermediate good, and tires are used in used Corvette that was manufactured earlier and had its own tires, that were intermediate goods and not new tires.

(2). The value of the sale of new doors by home Depot to a construction company that is building new homes which will be completed and sold in 2019 will be included in 2019 GDP as an intermediate good.

False. As new doors are an intermediate good, they will not be included in 2019 GDP as only the final good is included in GDP, and that final good includes the value of those new doors.

(3). The commission, $1500, earned today by a stockbroker on the sale of her client's stocks that are valued at $50000 will not be part of 2019 GDP.

False. As the commission charged by a stockbroker is the service charge and will be included in 2019 GDP even though stocks were not of this year but the commission is earned today.