Question

Based on this definition, indicate which of the transactions in the following table will be included in that is, directly increase) the GDP of the United States in 2021. 2021 GDP Included Excluded Transaction You chop down a cherry tree on your property in California and make a dining room table in 2021. This table does not pass through an organized market, but a similar table sells for $800 in a local furniture store. Athleticus, a U.S. shoe company, produces a pair of sneakers at a plant in Vietnam on March 17, 2021. Athleticus imports the pair of sneakers into the United States on May 21, 2021. 0 Zippycar, a U.S. automobile company, produces a convertible at a manufacturing plant in Minneapolis on January 9, 2021. It sells the car at a dealership in Detroit on February 2, 2021. 0 Sofaland, a Swedish furniture company, produces a table at a plant in Virginia on December 12, 2021. It sells the table to a college student on December 24, 2021. 0 Graincorp, a U.S. agricultural company, produces corn syrup at a plant in Iowa on September 19, 2021. It sells the corn syrup to Crunchy's for use in the production of cereal that will be made in the United States in 2021. (Note: Focus exclusively on whether production of the corn syrup increases GDP directly and ignore the effect of production of the cereal on GDP.)

Answer 1

1) Excluded

Explanation: In theory, the cherry table market value should be included in the GDP, however as the estimation of the value of do-it-yourself activities is not an easy task; such items are often not included when the Bureau of Economic Analysis computes the value of the U.S. GDP.

2) Excuded

Explanation: As it is not produced domestically thus will be excluded in GDP

3) Included

Explanation: As it is produced domestically thus will be included in GDP

4) Included

Explanation: Sofaland is a Swedish company; however the table is produced within U.S. and thus need to be included in the GDP of the United States

5) Excluded

Explanation: The corn syrup is used by Crunchy's that Graincorp produces in the production of cereal, thus corn syrup would be categorised as an intermediate good, not a final commodity and thus would not increase GDP in U.S.