Question

In: Economics

1. Analyze each of the following activities and explain if they would be counted in the...

1. Analyze each of the following activities and explain if they would be counted in the GDP, and why or why not:

a. deterioration of the water quality in the Atlantic Ocean,

b. the purchase of a new automobile,

c. services provided free of charge by a homemaker,

d. the production and sale of illegal drugs,

e. the purchase of 100 shares of American Airlines stock,

f. the installation of airbags in every automobile.

Solutions

Expert Solution

a) It will not be included in the GDP. (Unfortunately, we don't calculate the pollution created by us in the GDP. GDP only calculated the new products made and value additions. pollution of Atlantic ocean is not one of them. )

b) A purchase of a new Automobile will be calculated in the GDP. It is related to creation and selling of a new product.

c) Service provided for free are not calculated in the GDP. TO be calculated in the GDP the service should involve any monetary exchange, in this case, there is no economic value of service provided i.e. no monetary transaction. Another example of such services is a homemaker working at her own house for free, mother care for the child, community service etc.

d) Illegal drugs are not included in the GDP. Anything illegal is never included in the GDP like illegal arms trade, drugs, trafficking etc. As GDP includes only the market value the good which doesn't pass through the proper market channel are not included in GDP.

e) Stocks, government securities, social security, welfare payments are not included in the GDP. The only transaction that creates a new goods stocks are sold and resold in the market changing hands similarly a bike sold again will not be a part of GDP.

f) No, installation of airbags in the Automobiles will not be included in the GDP. They are part of a finished good that is the Car. When the car is sold the value of Airbags will be included in it. Intermediate goods do not form part of GDP.


Related Solutions

For each of the following transactions, explain briefly why they would or would not be counted...
For each of the following transactions, explain briefly why they would or would not be counted in the GDP of the United States. In your explanation, point out what component(s) or element(s) of GDP change and why. a) German auto producer Daimler AG builds a van factory in South Carolina. b) You buy the latest Samsung Galaxy J2 cell phone produced at a factory in South Korea. c) You baby-sit for your uncle’s children and he gives you $25 for...
Which of the following events/activities would be included in this year’s GDP? Explain briefly in each...
Which of the following events/activities would be included in this year’s GDP? Explain briefly in each case where does it show up both of the expenditure side and on the income side. (c) You prune the trees of your front yard. (d) You hire a tree service to prune the trees in your front yard. (f) An American graduate student grades your homework (grading assistants are ASU employees).
Using the expenditure approach, state whether each of the following transactions would be directly counted in...
Using the expenditure approach, state whether each of the following transactions would be directly counted in the U.S. Gross Domestic Product in the current year. (So we’re not counting the value of intermediate products that are indirectly counted when they become part of the value of the final products sold this year.) For those directly counted, indicate whether they count as C, I, G or NX, and indicate both the dollar amount of the contribution, and the sign (positive or...
For each of the following scenarios, explain how things are included or excluded from being counted...
For each of the following scenarios, explain how things are included or excluded from being counted in GDP: You get a new XBOX-1 gaming system at Best Buy last year and sell it on Facebook marketplace this year You buy a new digital textbook for your macroeconomics course You and your realtor find a fully renovated historic home that you purchase Newly produced leather that is used for automobile seats Your friend buys a 2020 certified pre-owned Toyota Your neighbor...
analyze the following independent errors and describe how each would effect 10column work sheet explain whether...
analyze the following independent errors and describe how each would effect 10column work sheet explain whether the error is likely to be discovered in completing the work sheet and if not the effect of the error of financial statement A-the adjustement for consumption of the insurance coverage credited the prepaid insurance account for 3100 and debited the same amount to the insurance expense account B-when completing the adjusted trial balance in the work sheet the 6700 repairs expense account balance...
1. Please explain why you would or would not think each of the following variables to...
1. Please explain why you would or would not think each of the following variables to be normally distributed. [Hint: For normally distributed variable, most of the data are around the middle value and frequency of observations keeps falling as you move away from the middle in both directions]. a. Retirement age of the U.S workers. b. Household income in the U.S. in 2018. c. Height of U.S. adults in 2018. d. Birthweight of girls in the U.S. in 2018....
For each of the following activities, explain which of the objectives of managerial accounting activity is...
For each of the following activities, explain which of the objectives of managerial accounting activity is involved. In some cases, several objectives may be involved. 1. Developing a bonus reward system for the managers of the various offices of the American Automobile Association. 2. Comparing the actual and planned cost of a consulting engagement completed by an engineering firm such as Allied Engineering 3. Determining the cost of manufacturing a tennis racket at Wilson Sporting Goods 4. Measuring the cost...
1. The number of vehicles on a highway link is counted on each of 40 randomly...
1. The number of vehicles on a highway link is counted on each of 40 randomly chosen days. The mean number of vehicles is found to be 135, and the standard deviation is 90. (a) Find a 90% confidence interval for the sample mean. (b) Find a 90% confidence interval for the mean, assuming it had been based upon a sample of 15 days, instead of a sample 40 days. Thank you very much!
1. Explain and show (separately) on a graph how each of the following would affect the...
1. Explain and show (separately) on a graph how each of the following would affect the demand for calculators: a. Cell phones now have a calculator function included b. Every course begins to require use of a calculator c. The price for a calculator falls from $20 to $7 d. Consumers’ incomes increase, and calculators are a normal good
Indicate whether each of the following was counted in the United States gross domestic product for...
Indicate whether each of the following was counted in the United States gross domestic product for the year 1998. Explain each of your answers. a) The commission earned by a Realtor who sold a house in 1998. The house was originally built in 1955. b) The value of an automobile produced in 1998, but sold on January 1st, 1999. c) The $1000 that Kevin earned from a stock that he bought and sold in 1998. d) The value of blenders...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT