Final answer:
GDP includes the value of all final goods and services produced in a country, like hospital stays and new car sales but excludes non-market items, like unpaid household labor and the sales of used goods.
Step-by-step explanation:
Items Included and Excluded in GDP
Gross Domestic Product (GDP) measures the market value of all final goods and services produced within a country in a given period of time. Regarding the items listed:
- The cost of hospital stays is included in GDP, as it represents payments for medical services provided by hospitals.
- The rise in life expectancy over time is not included in GDP as it is a non-market outcome reflecting quality of life, not an economic transaction.
- Child care provided by a licensed day care center is included in GDP because it is a paid service provided by a business.
- Child care provided by a grandmother is not included in GDP, as household labor is not typically compensated with a market transaction.
- A used car sale is not included in GDP since it does not represent a production of new goods; only new goods and services are counted.
- A new car sale is included in GDP because it represents a new good entering the marketplace.
- The greater variety of cheese available in supermarkets is not directly included in GDP; however, the sales of these cheeses are included as they represent market transactions.
- The iron that goes into the steel that goes into a refrigerator bought by a consumer is counted in GDP, but only at the final sale of the refrigerator to avoid double counting; the value of intermediate goods is included in the value of the final good