Question

Scott is a woodworker and charges $125 an hour for his time manufacturing custom-made wood products. For his wife's birthday, he designs and creates an intricate birdseye maple jewelry box that takes him 15 hours to complete. By how much and in what direction does GDP change as a result of his efforts?

		GDP rises by $1,875.
		GDP is not affected by Scott's production of the jewelry box.
		GDP rises by $125.
		GDP falls by $1,875.

Answer 1

GDP is not affected by scott's production of jewellery box.

This is because he is producing it to offer this box as a gift to his wife on her birthday. And gifts received in kind are excluded from national income calculation.