GDP - Gross Domestic Product Items Excluded from GDP Questions and Answers

Question 1

An economist is analyzing a country's economic activity. Which of the following transactions should be excluded from the calculation of the Gross Domestic Product (GDP)?

Accepted Answer

A homeowner purchasing a used car from a neighbor.

Answer

A local government purchasing new computers for a public school.

Answer

A foreign company building a new factory within the country.

Answer

A consumer paying for a newly released smartphone.

Question 2

A retired individual receives a monthly Social Security payment from the government. Why is this payment not included in the nation's GDP?

Accepted Answer

It represents a transfer of income, not payment for current production.

Answer

It is considered a non-market transaction.

Answer

The payment is for a service rendered in a previous year.

Answer

The amount is too small to have a significant impact on the overall economy.

Question 3

Which of the following scenarios describes a transaction that would be excluded from GDP to prevent the issue of double-counting?

Accepted Answer

A bakery purchases flour to make bread for its customers.

Answer

A consumer buys a new car from a dealership.

Answer

A government agency buys new office furniture.

Answer

A company exports finished clothing to another country.

Question 4

A citizen of Country A purchases newly issued shares of stock in a company from Country A. How does this transaction affect Country A's GDP?

Accepted Answer

It has no direct impact on GDP.

Answer

It increases the investment component of GDP.

Answer

It increases the consumption component of GDP.

Answer

It decreases net exports.

Question 5

All of the following are examples of non-market transactions excluded from GDP EXCEPT:

Accepted Answer

The value of a haircut purchased at a local salon.

Answer

The value of a mechanic repairing their own car.

Answer

The value of unpaid childcare provided by a parent.

Answer

The value of vegetables grown in a personal garden for home consumption.

Question 6

A country's GDP calculation would NOT include which of the following?

Accepted Answer

The illegal sale of goods in an underground economy.

Answer

A new car manufactured domestically but not yet sold to a consumer.

Answer

The services provided by a real estate agent for the sale of a new home.

Answer

Government spending on the construction of a new public library.