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
A landlord sells an apartment building originally constructed in 2010. What portion of the 2025 sale price is included in 2025 GDP?
Answer: None; the structure was counted when built in 2010
The sale of existing real estate is a transfer of a previously produced asset; only new construction is included in GDP.
Which of the following is the best example of a non-market activity excluded from GDP?
Answer: A person mows their own lawn instead of hiring a landscaper
Self-provided services like personal lawn care have no market transaction and therefore no recorded price, excluding them from GDP.
Government unemployment insurance payments are excluded from GDP because they:
Answer: Are transfer payments not tied to current production
Unemployment benefits transfer income to individuals without requiring the production of goods or services, making them a transfer payment excluded from GDP.
An economist notes that GDP undercounts true economic welfare partly because it excludes:
Answer: Household production such as cooking and cleaning
Household production adds real value to people's lives but lacks market prices, causing GDP to understate total economic well-being.
Which item would be excluded when calculating GDP using the expenditure approach?
Answer: A $200 billion federal student loan disbursement (financial transfer)
Federal loan disbursements are financial transfers that provide purchasing power but do not themselves represent purchases of new goods or services.
Why is the purchase of a plot of land excluded from GDP?
Answer: Land is a pre-existing natural resource, not a newly produced good
Land is not produced by labor or capital; it is a natural resource, and transferring ownership of it adds no new output to the economy.
Used clothing sold at a thrift store is excluded from GDP because:
Answer: The goods were counted in GDP when originally produced and sold as new
Second-hand sales transfer ownership of already-counted goods; including them again would double-count their original production value.