Question

Which of the following are included in US GDP. Be sure to identify which component? For those items not included, explain (in complete sentences) why they are not included in GDP.

a. Jane buys newly issued shares of stock in XYZ Company, Inc.

b. Joey has his beard trimmed in a hair salon in New York.

c. Rachel buys an antique chest at an antique shop.

d. Sam fixes his neighbor’s car in exchange for a basket of muffins.

e. Monica buys tomatoes to use in the pasta sauce she sells at farmers’ markets.

Answer 1

a) Jane buys newly issued shares of stock in XYZ Company, Inc.

Purchase of shares and stock are not included in GDP as they do not contribute to output.

b) Included under consumption.

c) Not included as it is a resale of goods. Sale and purchase of used goods are not included in GDP.

d) Not included as there is no economic value to the exchange.

e) Not included as purchase of tomatoes is an intermediary good. Intermediary goods are not included in GDP calculation.