Question

please work on that carefully. thank you

1. Say whether each of the following is or is not counted (directly) as part of GDP.

a. David mows his lawn.

b. David starts a landscaping company and mows his neighbor’s lawn for money.

c. David buys a new lawnmower for his landscaping business.

d. David buys a used truck for his business.

2. Say which category of GDP each of the following falls into.

a. A sewing machine

b. A cheeseburger

c. A fighter jet

3. An economy produces one good: widgets. The quantity and price of widgets in several years is given below

Year​​ Widgets​​ Price

2010​​ 250​​​ 10

2011​​ 300​​​ 11

2012​​ 350 ​​​12

a. Find nominal and real GDP for each period using 2010 as the base year.

b. Find real GDP for each period using 2012 as the base year.

Answer 1

As per HOMEWORKLIB RULES, in case of multiple questions only the first question is to be answered

Kindly ask rest of the questions in a separate post.

1.

a. David mows his lawn: No (household activities are not counted in GDP)

b. David starts a landscaping company and mows his neighbor’s lawn for money: Yes (as a service is being provided in exchange of money)

c. David buys a new lawnmower for his landscaping business: Yes (as it is an investment expenditure, which is a part of GDP)

d. David buys a used truck for his business: No (resale or second hand items purchase and sale are not counted under GDP)