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Homework answers / question archive / Indicate if the following is part of the current GDP
Indicate if the following is part of the current GDP. If so, indicate which component of GDP is impacted. If not, explain why not.
a. Melissa buys a shirt for $50 from Goodwill.
b. Philip pays a lawn care service $300/month.
c. Chris is a stay at home dad who takes care of the children. He is not compensated for his time.
Any expenditure incurred by a residential individual within a specific year is considered to be a part of the GDP of that year.
1. Melissa buys a shirt for $50 from Goodwill: An expenditure incurred on a shirt will be recorded as consumption expenditure that will increase the GDP by $50.
2. Philip pays a lawn care service $300/month: It is an expenditure to avail lawn care service due to which it is a part of consumption expenditure and leads to an increase in the GDP level by $300/month, which is $36,000 in a year.
3. Chris is a stay at home dad who takes care of the children. He is not compensated for his time: This activity will not be considered as economic activity as Chris does not get income to take care of the children. Therefore, there is no impact on GDP.
