Which of these following scenarios would be included in GDP?
revenue from selling a four-year old car
fees charged for a stock broker services
Receipts from selling land
Value of a leaf raking service provided by a 16 year old as part of his chores
The correct answer and explanation is:
The correct answer is:
Fees charged for a stock broker’s services.
Explanation:
Gross Domestic Product (GDP) measures the total market value of all final goods and services produced within a country’s borders in a given period. It includes consumption, investment, government spending, and net exports. However, not all financial transactions or economic activities contribute to GDP. Let’s analyze each scenario:
- Revenue from selling a four-year-old car:
This transaction is a resale of a used good, which does not contribute to GDP. GDP only includes the production of new goods and services. The car was already counted in GDP when it was first produced and sold as new. - Fees charged for a stock broker’s services:
This is included in GDP because it represents payment for a service provided in the current year. GDP includes services such as financial advising, banking, and brokerage fees because they contribute to economic activity. - Receipts from selling land:
The sale of land does not contribute to GDP because land is not produced—it is simply transferred from one owner to another. However, services related to the sale, such as those provided by real estate agents, would be included. - Value of a leaf-raking service provided by a 16-year-old as part of his chores:
Since this is an informal household service not conducted in the market economy, it is not included in GDP. GDP only accounts for goods and services that are bought and sold in formal markets.
Thus, only the stock broker’s fees are included in GDP, as they represent the production of a service within the given year.
Now, I’ll generate an image representing this concept.
Here is an illustration depicting different economic activities and their inclusion in GDP. It visually represents which activities contribute to GDP and which do not, helping to clarify the concept. Let me know if you need any modifications!
