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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 2022.
Scenario
2022 GDP
Included
Excluded
Lane Motors, a Japanese automobile company, produces a self-driving car at a plant in Arizona on December 15, 2022. A family buys the self-driving car on December 31.
The Wilson family buys an antique serving platter at an auction in upstate New York on March 2, 2022.
Larry’s Lattes, a U.S. coffee company, produces a latte at its location in Los Angeles on January 17, 2022. It sells the latte to a customer immediately.
Rotato, a U.S. tire company, produces a set of tires at a plant in Michigan on September 12, 2022. It sells the set of tires to Speedmaster for use in the production of a two-door coupe that will be made in the United States in 2022. (Note: Focus exclusively on whether production of the set of tires increases GDP directly, and ignore the effect of production of the two-door coupe on GDP.)
Gamewear, a U.S. electronics company, produces a VR headset at a plant in South Korea on March 2, 2022. Gamewear imports the VR headset into the United States on May 10, 2022.

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:
1 / 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 2022.
Scenario
2022 GDP
Included
Excluded
Lane Motors, a Japanese automobile company, produces a self-driving car at a plant in Arizona on December 15, 2022. A family buys the self-driving car on December 31.
The Wilson family buys an antique serving platter at an auction in upstate New York on March 2, 2022.
Larry’s Lattes, a U.S. coffee company, produces a latte at its location in Los Angeles on January 17, 2022. It sells the latte to a customer immediately.
Rotato, a U.S. tire company, produces a set of tires at a plant in Michigan on September 12, 2022. It sells the set of tires to Speedmaster for use in the production of a two-door coupe that will be made in the United States in 2022. (Note: Focus exclusively on whether production of the set of tires increases GDP directly, and ignore the effect of production of the two-door coupe on GDP.)
Gamewear, a U.S. electronics company, produces a VR headset at a plant in South Korea on March 2, 2022. Gamewear imports the VR headset into the United States on May 10, 2022.
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 Larry’s Lattes example is straightforward and should clearly count as something produced in the United States in 2022. Each of the other examples is a little more complicated.
Although Lane Motors is a Japanese company, the self-driving car is produced within the United States and should be included in the GDP of the United States.
Gamewear is a U.S. company, but because it produces the VR headset in South Korea, the output will be part of the GDP of South Korea, not the GDP of the United States.
Because Speedmaster uses the set of tires that Rotato produces in the production of a two-door coupe, the set of tires 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 two-door coupe will include the value of the set of tires. Therefore, the market value of the set of tires will enter GDP as part of the market value of the final good, the two-door coupe.
To avoid double counting, the value of resold items is not included in GDP. In this example, the platter entered GDP in the year in which it was originally manufactured.

Posted by Cleveland on September 3, 2024
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