D. INominal GDP 4. Which of the following is NOT included in U.S. GDP? A. The co

Question

D. INominal GDP 4. Which of the following is NOT included in U.S. GDP? A. The construction of new homes to replace those destroyed by fires in California. B. Shoes produced in China and imported by a U.S. company. C. The purchase of machines by factories located in Delaware D. The purchase of U.S. soybeans by a food manufacturer in Canada. 5. Suppose during a year an economy produces $10 trillion of consumer goods, $4 trillion of investment goods, $6 trillion in government services, and has $4 trillion of exports and $S trilli of imports. GDP would be: A. $19 trillion. B. $21 trillion. C. $24 trillion. D. $29 trillion.

Explanation / Answer

Question 4

GDP of a country includes the money value of all final goods and services that are produced within the domestic territory of a country.

In given case, shoes produced in China and imported into the United States are produced in China and not with in the domestic territory of United States.

So, shoes produced in China and imported by a US company is not included in US GDP.

Hence, the correct answer is the option (B).

Question 5

Value of the consumption goods = $10 trillion

Value of the investment goods = $4 trillion

Value of the government services = $6 trillion

Value of the exports = $4 trillion

Value of the imports = $5 trillion

Calculate the GDP -

GDP = Value of the consumption goods + Value of the investment goods + Value of the government services + Value of exports - Value of the imports

GDP = $10 trillion + $4 trillion + $6 trillion + $4 trillion - $5 trillion = $19 trillion

The GDP is $19 trillion.

Hence, the correct answer is the option (A).

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