Question

Which of the following are included in U.S. GDP calculations? Pl ease explain.

a. cleaning services performed by Molly Maid Corporation

b. lawn-mowing services performed by yourself

c. drugs sold illegally on a local street corner

d. prescription drugs manufactured in the United States and sold at a local pharmacy

e. a rug woven by hand in Turkey

f. air pollution that diminishes the quality of the air you breathe

g. toxic-waste cleanup performed by a local company

h. car parts manufactured in the United States for a car assembled in Mexico

i. a purchase of 1 , 0 0 0 shares of IBM stock

j. monthly Social Security payment received by a retiree

Answer 1

a)	Cleaning services performed by Molly Maid Corporation	It is the price of the final good that is included in GDP.
b)	Lawn-mowing services performed by yourself	Not included as it has no market value.
c)	Drugs sold illegally on a local street corner	Not included as illegal goods are excluded from GDP
d)	Prescription drugs manufactured in the United States and sold at a local pharmacy	Included in GDP as consumption
e)	A rug woven by hand in Turkey	Not included in GDP as it is manufactured outside U.S.A.
f)	Air pollution that diminishes the quality of the air you breathe	Pollution is not included in GDP.
g)	Toxic-waste cleanup performed by a local company	Included as it is final good.
h)	Car parts manufactured in the United States for a car assembled in Mexico	Included as final good.
i)	A purchase of 1,000 shares of IBM stock	Stock is not included as there is no production of goods and services.
j)	A monthly Social Security payment received by a retiree	Excluded from GDP as it is a transfer payment.