In the following situations, explain what is counted in this year\'s GDP: You bo

Question

In the following situations, explain what is counted in this year's GDP: You bought a new Wii at GameStop last year and resold it on eBay this year. You purchase an investing for Dummies book at Barnes & Noble. You purchase a historic home using the services of a real estate agent. You detail your car so it is spotless inside and out. You purchase a new hard drive for your old laptop. Your physical therapist receives $300 for physical therapy but reports only $100. Apple buys 1.000 motherboards for use in making new computers. Toyota produces 10,000 new Camrys that remain unsold at the end of the year.

Explanation / Answer

a.

Reselling should not be counted as GDP.

b.

Purchasing a book is consumption expenditure. Therefore, should be counted as GDP.

c.

Purchasing a historic home is a second hand item. Therefore, should not be counted as GDP.

d.

Detailing a car is a renovation. It is considered as consumption expenditure and should be counted as GDP.

e.

Purchasing a new hard drive is consumption expenditure. Therefore, should be counted as GDP.

f.

Here GDP is $100, since that much amount has been reported.

g.

This is intermediary goods and should not be counted as GDP.

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