Which of the following is included in GDP?
(a) the value of a used car a man purchases from a car dealer
(b) the value of the stocks and bonds an analyst purchases from a firm
(c) the value of a meal a mother cooks for her family
(d) the value of cocaine an addict purchases from a drug dealer
(e) the value of the legal services a woman purchases from a lawyer
Answer: The correct options are a and e.
GDP refers to the total value of all the goods and services produced in a given period, commonly a year produced within a country’s borders only. This involves own account products which are legally made for sale in the market and for which consideration in the form of money is claimed. This is because the buying of a used car from a car dealer and solicitors’ services from a lawyer are market activities that assist in the production of goods in the economy and are therefore covered in the calculation of the GDP. However, those processes that do not have prices such as home-made cooked foods, purchase of stocks and bonds, and especially smuggling of drugs, are excluded from GDP.
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