Exciting Facts About GDP and Market Value
What is included in the Gross Domestic Product (GDP) in terms of market value?
a) Only Joe's and Bob's grocery store purchases are included in GDP.
b) Only Bob's backyard oranges are included in GDP.
c) Only Joe's grocery store purchases are included in GDP.
d) Neither Joe's nor Bob's purchases are included in GDP.
Answer:
In the context of GDP, only market value of goods and services are included, such as Joe's grocery store purchases. Homegrown products, such as Bob's backyard oranges, not sold in the market do not contribute to the GDP. The answer is c) Only Joe's grocery store purchases are included in GDP.
Explanation:
In economic terms, the Gross Domestic Product (GDP) refers to the total value of all goods produced and services provided in a country during a specific time period. It's a measure of economic activity. The question is about what counts towards the total GDP. Choice a) states that only Joe's and Bob's grocery store purchases are included in GDP. This is not entirely true as it is incomplete. The accurate inclusion of GDP related to this question is Joe's grocery store purchases and Bob's backyard oranges don't contribute to the GDP because GDP comprises the market value of goods and services. Hence, Bob's homegrown oranges, which he did not sell, are not included in this calculation. Consequently, the answer is c) Only Joe's grocery store purchases are included in GDP. The correct statement is a) Only Joe's and Bob's grocery store purchases are included in GDP.