GDP Items Excluded from GDP 3

Question 1

Underground (black market) economic activity is generally excluded from official GDP because:

Accepted Answer

It is not reported or measured by official statistical agencies

Answer

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.

Question 2

A parent stays home to care for their children rather than hiring a nanny. This unpaid childcare is excluded from GDP because:

Accepted Answer

It is not a market transaction and no payment is made

Answer

Non-market household production lacks a market price, making it impossible to include in GDP using standard national accounts methodology.

Question 3

Which financial transaction is excluded from US GDP?

Accepted Answer

A US investor purchasing shares of Apple stock on the NYSE

Answer

Stock purchases are financial transactions transferring ownership of existing assets, not new production, so they are excluded from GDP.

Question 4

Why are pension checks received by retired workers excluded from GDP?

Accepted Answer

They are transfer payments unaccompanied by current production

Answer

Pension payments redistribute previously earned income to retirees; no new output is produced in exchange for the payment.

Question 5

A company sells its old factory equipment to another firm for $2 million. How does this affect GDP?

Accepted Answer

It has no effect because used capital goods are excluded

Answer

Sales of existing capital assets transfer ownership without creating new output, so they are excluded from GDP.

GDP - Gross Domestic Product Practice Test

GDP - Gross Domestic Product Practice Test

GDP Items Excluded from GDP 3