Question

Which of the following leads to an increase in GDP for the United States in 2011? 1. $10,000 worth of Washington apples are sold to a grocery firm in Mexico in October 2011 II. A customer pays $50 for a haircut in a Tempe salon in June 2011. III. A GM car is produced in Detroit in July 2011 and sold to a dealer. The car sits on the lot until 2012. IV. A plumber is paid $500 for services provided in Tempe in March 2011, but he conceals his income from tax authorities. o I and II I, II, and III oll and III o I and III I, II, III and IV < Previous

Answer 1

Answer:I, II, AND III are included in GDP.

Selling apples to firm in Mexico comes under the export component of GDP.

A customer paying for a haircut comes under consumption expenditure as it is an expenditure paid on the consumption of service.

The car produced and sold to a dealer who in turn kept on the lot comes under investment component of GDP. GDP includes all the goods and services produces in a particular year.

A plumber being paid for his services is not included in GDP since its an informal service. It is not recorded by the government and tax authorities.