In the table below, indicate whether the item is included or excluded from the calculation of...

In the table below, indicate whether the item is included or excluded from the calculation of GDP. Some items may count negatively. Explain your answer, and in your explanation, if the item is included in GDP, please state whether the item counts in consumer expenditures (C), investment (I), government spending (G) or Net Exports (NX).

Item	Include/Exclude And Where (C, I, G, NX)	Reason for Inclusion/Exclusion
Jason McNamara’s purchase of a 1958 Edsel produced by Ford motor company from Mary Montgomery.
The salary of a Boise City policewoman paid this year.
100 pounds of lentils produced in Idaho this year but sold to Canadians
Newly issued WeWork stock purchased on the New York Stock Exchange
The stain purchased by Alicia Garza to refurbish her deck.
The house purchased by Troy Emge in Harris Ranch (Boise, ID) that was just completed.
Protective coveralls produced in the U.S. this year sold to U.S. hospitals for use by nurses treating COVID-19 patients
The Macroeconomics textbook published by Cengage this year that did not sell.
The value of the babysitting services provided by Kelly Chen when she stays home to take care of her new daughter.
The marijuana produced by a grower in Idaho.

B. In 100-300 words, explain at least 3 limitations of the use of GDP as a measure of economic well-being. Please label your first explanation with an “a”, your second explanation with a “b”, and your third explanation with a “c”.

Expert Solution

The 1968 Edsal will not be counted as part of GDP for current year. This has already been counted in GDP for the year it was sold to Mary Montgomery. Counting this in GDP will just result in double counting since this car is not produced in the current year. So we cannot count this as consumption expense for this year. Only if some value was added on the resale, then we could have added this to GDP.

The salaries paid to police man this year is part of current year GDP because they recieve this payment for the service they have provided this year. This is income component of GDP and will be added to GDP when we measure through income approach

The lentills have surely been produced withing the boundaries of the nation in the current year. So this are part of the GDP of the nation. This is sold to Canada and so is part of exports of the nation.

Newly issued stocks brought from the NYSE is an investment made this year. So this will be counted as part of GDP under I.

The newly brought stain is made this year and brought freshly by Alicia. This is a small investment towards raw material to refurbish her deck. So this is part of GDP under I category.

This is also included in GDP as its produced and brought this year. Buying a new house is a residential fixed invetsment.

Protective coveralls made in US is surely a part of their GDP. Since this are brought by the hospital for protection and continous service without hindrance, this should be considered a business investment made by the hospital.

As the book by cengage was made this year, it will be counted in as part of this year's gdp. Unsold items are treated as if they are brought by the producers to be sold in the next year. This is known an inventory investment and is counted as GDP under I category

Unpaid services are not counted in part of GDP. Such services require imputations which are based on rough estimates. Such imputations are not included.

In Idaho, marijuana is illegal. So the amount of marijuana produced is part of the black market. This is not added to be part of GDP.

Rahul Sunny answered 2 years ago

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