Question #2299

Which of the following would add to GDP in any on period?

1. (a) The purchase of some strawberries from the supermarket.
2. (b) The payment by the national government for public servants in the tax department.
3. (c) The payment by the national government to an aged pension recipient.
4. (d) The purchase of a old model car from a car dealer.
5. (e) The purchase of some house paint by an owner occupier as part of a refurbishment project.
6. (f) The purchase of some house paint by a professional painting tradesperson as part of a refurbishment project.
7. (g) The sale of some military equipment to another country.
8. (h) The purchase of some shares in an airline company.

• a, b, c, d
• a, b, c, f, g
• a, b, c, e, g
• a, b, e, g

Answer #11517

Answer: a, b, e, g

Explanation

The answer is a, b, e, g

GDP is the market value of all final goods and services produced in a given period.

So it must be a market value and a final rather than an intermediate good or service.

It must also be something that is produced in the relevant period.

It cannot be an intermediate good.

It cannot be a transfer of income.

It cannot be a financial asset, which is not produced.

So GDP in the current period would not count:

Option (c) - which is just a redistribution of income generated not new income.

Option (d) the second hand car, which would have been counted in the GDP for the period it was produced but not this period.

Option (f) which would be considered an intermediate good. The final value of the painting by the tradesperson would be counted though.

Option (h) is a financial market transaction - there is no production.