Question

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).

Answer 1

c) Pruning the trees in the front yard without any additional help from an external source would not be included in GDP because this is not accounted or unpaid work done for the household and hence not included in GDP

d) Hiring a tree service to prune the trees in the front yard would be considered a paid job for the tree service and hence would be an expenditure .This should be included in the GDP. From the expenditures side it would be a consumption expenditure then on on the maintenance of house and from the income side it would be the wages for the workers of the tree service ie for the labour services provided by them

f) an American graduate student grading the homework would be an employee of ASU. Hence it would be included in the gdp. The pay to the assistant would be the income for the university in form of wages or salary to the assistant and the expenditure would be consumption expenditure ie the services component of the consumption expenditure.

(You can comment for doubts)