Which of the following transactions is included in GDP calculations?A.Anne helps clean up her mother's house once a week.B.ED Co.Ltd purchases new debentures issued by Heyleys Co Ltd in the market.C.Rodger buys a new town house in Melbourne from the JK Builders.D.John sells his old car to purchase a new car.
Question
Which of the following transactions is included in GDP calculations?A.Anne helps clean up her mother's house once a week.B.ED Co.Ltd purchases new debentures issued by Heyleys Co Ltd in the market.C.Rodger buys a new town house in Melbourne from the JK Builders.D.John sells his old car to purchase a new car.
Solution
The transaction that is included in GDP calculations is C. Rodger buys a new town house in Melbourne from the JK Builders.
Here's why:
A. Anne helps clean up her mother's house once a week - This is not included in GDP because it is a non-market activity. GDP only includes market transactions.
B. ED Co.Ltd purchases new debentures issued by Heyleys Co Ltd in the market - This is not included in GDP because it is a financial transaction, not a transaction of goods or services. GDP only includes the production of goods and services.
C. Rodger buys a new town house in Melbourne from the JK Builders - This is included in GDP because it is a transaction of a newly constructed house, which is considered a final good. GDP includes all final goods and services produced within a country in a given period.
D. John sells his old car to purchase a new car - The sale of used goods is not included in GDP. However, the purchase of the new car would be included in GDP. But since the question only mentions the sale of the old car, this transaction is not included in GDP.
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