Question

Which of the following are production activities that are included in GDP? Which are not?

a. Mr. King performs the service of painting his own house instead of paying someone else to do it.

b. Mr. King paints houses for a living.

c. Mrs. King earns income from parents by taking baby photos in her digital photography studio.

d. Mrs. King takes photos of planets and stars as part of her astronomy hobby.

e. ${\mathrm{E}}^{\star }$Trade charges fees to process Internet orders for stock trades.

f. Mr. Ho spends $\backslash (10,000$on shares of stock via an Internet trade order and pays a $\backslash )10$brokerage fee.

g. Mrs. Ho receives a Social Security payment.

h. Ms. Hernandez makes a $\$300$payment for an Internet-based course on stock trading.

i. Mr. Langham sells a used laptop computer to his neighbor.

Short answer

Option a,d,g and i are cannot be included in GPD

Step-by-step solution

    Introduction

GDP is the total market value of all final output of goods and services produced and transacted in an economy during a given year.

     Option a is

a) Painting is a service production, but because it does not result in a market transaction, it is not included in GDP.

    Option b is

b) Painting is a form of service production, and painting houses for a living is a market transaction in which he earns money. The revenue earned from house painting is included in the GDP.

    Option c is

c) Photography is a service production, and shooting images for money is a market transaction, and she earns money from this activity. The revenue generated is accounted for in the GDP.

    Option d is

d) Photography is a service production, and taking images as a hobby is neither a market transaction or a source of money for her.

As a result, photography as a pastime is not counted as part of GDP.

    Option e is

e) Service charges are a production activity associated with the provision of a service.

A market transaction is a fee levied by the e-trade for stock transactions. And the revenue created as a result is factored into GDP.

    Option f is

f) Mr. Ho's investment of $\$10000$in stock cannot be included in GDP since it is not a productive activity; it is just the transfer of stock ownership from one person to another.

However, the $\$10$brokerage fee is a producing activity. This is the fee that the brokerage firm receives for providing the trading service. As a result, this $\$10$will be included in GDP.

    Option g is 

g) Getting a social security payment is nothing more than a money transfer from the government to the recipient. There is no useful activity taking place here. As a result, it is not included in the GDP.

Step 9:      Option h is

h) An internet-based course is an online educational service and a service delivery producing activity.

A market transaction is the $\$300$fee payable by the trading company. And the revenue created as a result is factored into GDP.

    Option i is

i) Selling a used laptop does not generate new productive activity because the laptop's cost was already factored into the GDP when it was sold as a new item that year.

As a result, this transaction is not accounted for in the GDP.