Answer to Question #230285 in Macroeconomics for aqlama

Question

Here are some brain teasers. Can you see why the following are not counted in U.S. GDP? a. The gourmet meals produced by a fine home chef b. The purchase of a plot of land c. The purchase of an original Rembrandt painting d. The value I get in 2009 from playing a 2005 compact disc e. Damage to houses and crops from pollution emitted by electric utilities f. Profits earned by IBM on production in a British factory  

Answer 1

Gross Domestic Product (GDP) is measured based on the product method,  expenditure method, and  income method. Gross Domestic Product is the value of services and goods produced in a particular economy.

a) The gourmet meals produced by a fine home chef

Should not be counted in Gross Domestic Product since it possess imputed value.

b) The purchase of plot of land

This should not be counted in Gross Domestic Product since contains imputed value and a purchase value.

c) The purchase of original rebrand painting

This should not be counted as it possess a purchase value and it is also a part of a country.

d) The value I get in 2009 from playing 2005 compact disc

Should not be counted in GDP because the transaction has occurred in 2009 and it is simply renewal of the compact disk.

e) Damage to houses and from pollutions emitted by electric utilities

Should not be counted in GDP as this a wear and tear of a property.

f)  Profits earned by IBM on production in a British factory

Should not be counted in GDP since it is not locally produced.