Which of the following are counted in this year\'s GDP? Explain your answer in e

Question

Which of the following are counted in this year's GDP? Explain your answer in each case. a). Flashy Car Company sold a used car. b). Juanita Jones cooked meals for her family. c). Mircosoft paid interest on its bond. d). Jose Suarez purchased 100 shares of Microsoft stock. e). Bob Smith received a welfare payment. f). Carriage Realty earned a brokerage commission for selling a previously owned bonds. h). Air and water pollution increase. i). Gambling is legalized in all states. j). A retired worker receives a Social Security payment.

Explanation / Answer

a). Flashy Car Company sold a used car - Not counted in this year's GDP as it is produced in some previous year and it's value is already included in GDP in that year

b). Juanita Jones cooked meals for her family. - Not counted in this year's GDP as It's not a market transaction. If any payment is made, it will be within the family.

c). Mircosoft paid interest on its bond. - Counted in this year's GDP as Income received by the bondholder for the services derived by the corporation for the loan of money.

d). Jose Suarez purchased 100 shares of Microsoft stock. -Not counted in this year's GDP as it's a noninvestment transaction; it is merely the transfer of ownership of financial assets. (If Microsoft uses the money from the sale of a shares to carry out an investment in real physical assets that will be counted.)

e). Bob Smith received a welfare payment. -Not ounted in this year's GDP as as it's a transfer payment from taxpayers for which no service is rendered

f). Carriage Realty earned a brokerage commission for selling a previously owned bonds. - Counted in this year's GDP as a service is rendered in the process.

h). Air and water pollution increase. - Not counted in this year's GDP as it's n't included as costs in the accounting

i). Gambling is legalized in all states.- Not counted in this year's GDP as it's its just the transfer of the funds and no new service is rendered or product is produced.

j). A retired worker receives a Social Security payment.- Not counted in this year's GDP as it's a transfer payment from taxpayers for which no service is rendered (in this year).

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