If you appreciate our work, consider supporting us:

QUESTION:
The gross domestic product (GDP) of the United States is defined as the    all        in a given period of time.
Based on this definition, indicate which of the following transactions will be included in (that is, directly increase) the GDP of the United States in 2021.
Scenario
2021 GDP
Included
Excluded
An accountant starts a client's 2021 tax return on April 14, 2022, finishing it just before midnight on April 15, 2022.
Thickburger, a U.S. fast-food company, produces a double cheeseburger at one of its many locations throughout the midwest on January 14, 2021. It sells the double cheeseburger to a customer that same day.
Sleepytown, a Finnish furniture company, produces a bed frame at a plant in Virginia on December 9, 2021. It sells the bed frame to a college student on December 24.
Graincorp, a U.S. agricultural company, produces corn syrup at a plant in Iowa on September 25, 2021. It sells the corn syrup to Crunchy's for use in the production of cereal that will be made in the United States in 2021. (Note: Focus exclusively on whether production of the corn syrup increases GDP directly, and ignore the effect of production of the cereal on GDP.)
Parkway Motors, a U.S. automobile company, produces a convertible at a plant in Mexico on March 27, 2021. Parkway Motors imports the convertible into the United States on May 18, 2021.

ANSWER:

The gross domestic product (GDP) of the United States is defined as themarket value of  Correct allfinal goods and services produced  Correct within the United States  Correct in a given period of time.
Points:
0.67 / 1
Based on this definition, indicate which of the following transactions will be included in (that is, directly increase) the GDP of the United States in 2021.
Scenario
2021 GDP
Included
Excluded
An accountant starts a client's 2021 tax return on April 14, 2022, finishing it just before midnight on April 15, 2022.
Thickburger, a U.S. fast-food company, produces a double cheeseburger at one of its many locations throughout the midwest on January 14, 2021. It sells the double cheeseburger to a customer that same day.
Sleepytown, a Finnish furniture company, produces a bed frame at a plant in Virginia on December 9, 2021. It sells the bed frame to a college student on December 24.
Graincorp, a U.S. agricultural company, produces corn syrup at a plant in Iowa on September 25, 2021. It sells the corn syrup to Crunchy's for use in the production of cereal that will be made in the United States in 2021. (Note: Focus exclusively on whether production of the corn syrup increases GDP directly, and ignore the effect of production of the cereal on GDP.)
Parkway Motors, a U.S. automobile company, produces a convertible at a plant in Mexico on March 27, 2021. Parkway Motors imports the convertible into the United States on May 18, 2021.
Points:
1 / 1
Close Explanation
Explanation:
The gross domestic product (GDP) of the United States is defined as the market value of all final goods and services produced within the United States in a given period of time, such as a year or quarter.
The Thickburger example is straightforward and should clearly count as something produced in the United States in 2021. Each of the other examples is a little more complicated.
Although Sleepytown is a Finnish company, the bed frame is produced within the United States and should be included in the GDP of the United States.
Parkway Motors is a U.S. company, but because it produces the convertible in Mexico, the output will be part of the GDP of Mexico, not the GDP of the United States.
Because Crunchy's uses the corn syrup that Graincorp produces in the production of cereal, the corn syrup is considered an intermediate good, not a final good and, therefore does not directly increase the GDP of the United States. However, the price of the cereal will include the value of the corn syrup. Therefore, the market value of the corn syrup will enter GDP as part of the market value of the final good, the cereal.
Because the accountant provides her services during 2022, the value of those services will be included in 2022 GDP, not 2021 GDP.

Posted by Cleveland on September 3, 2024
Back to Questions