3. Which of the following transactions are included in gross domestic product, a
ID: 1179959 • Letter: 3
Question
3. Which of the following transactions are included in gross domestic product, and by how much does each raise GDP?
a) Smith pays a carpenter $50,000 to build a garage.
b) Smith purchases $10,000 worth of materials and builds himself a garage, which is worth $50,000.
c) Smith goes to the woods, cuts down a tree, and uses the wood to build himself a garage that is worth $50,000.
d) The Jones family sells its old house to the Reynolds family for $400,000. The Joneses then buy a newly constructed house from a builder for $500,000.
e) You purchase a used computer from a friend for $200.
f) Your university purchases a new mainframe computer from IBM, paying $25,000.
g) You win $100 in an Atlantic City casino.
h) You make $100 in the stock market.
i) You sell a used economics textbook to your college bookstore for $60.
j) You buy a new economics textbook from your college bookstore for $100.
Explanation / Answer
a) +50,000
b) +50,000
c) +50,000
d) +500,000
e) 0
f) +25,000
g) 0
h) 0
i) 0
j) +100
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