Question

Indicate the category of each item in GDP, or whether it is not in GDP. Assume products are made domestically unless indicated otherwise: A gas station installs new pumps. multiple choice 1 Consumption Investment Govt. Purchases Imports or Exports Not in GDP A bakery buys flour. g

Answer 1

It is included in GDP as part of Investment

It is not included in GDP because it is an intermediate good.

Step-by-step explanation:

Gross domestic product is the total sum of final goods and services produced in an economy within a given period which is usually a year

GDP calculated using the expenditure approach = Consumption spending by households + Investment spending by businesses + Government spending + Net export

Items not included in the calculation off GDP includes:

1. services not rendered to oneself

2. Activities not reported to the government

3. illegal activities

4. sale or purchase of used products

5. sale or purchase of intermediate products

Intermediate goods are goods used in the production of other goods. They are not included in GDP. Flour is an intermediate good because it is used in the production of bread and pastries