Items Excluded from GDP Flashcards
7 cards from real GDP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Items Excluded from GDP flashcards as text
Underground (black market) economic activity is generally excluded from official GDP because:
Answer: It is not reported or measured by official statistical agencies
Black market and informal transactions are not captured in official data, so they are excluded from measured GDP even though they represent real economic activity.
A parent stays home to care for their children rather than hiring a nanny. This unpaid childcare is excluded from GDP because:
Answer: It is not a market transaction and no payment is made
Non-market household production lacks a market price, making it impossible to include in GDP using standard national accounts methodology.
Which financial transaction is excluded from US GDP?
Answer: A US investor purchasing shares of Apple stock on the NYSE
Stock purchases are financial transactions transferring ownership of existing assets, not new production, so they are excluded from GDP.
Why are pension checks received by retired workers excluded from GDP?
Answer: They are transfer payments unaccompanied by current production
Pension payments redistribute previously earned income to retirees; no new output is produced in exchange for the payment.
A company sells its old factory equipment to another firm for $2 million. How does this affect GDP?
Answer: It has no effect because used capital goods are excluded
Sales of existing capital assets transfer ownership without creating new output, so they are excluded from GDP.
Child support payments made between former spouses are excluded from GDP because they are:
Answer: Private transfer payments with no associated production
Private transfer payments such as alimony and child support redistribute income between individuals without generating new goods or services.
Volunteer work for a nonprofit organization is excluded from GDP primarily because:
Answer: No monetary transaction occurs, so no market value is recorded
GDP measures market output; since volunteer labor involves no payment, there is no market price to include in national accounts.