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Answer :
Final answer:
Lumber, French fries, and steel would be included in the calculation of gross domestic product (GDP)
Explanation:
Lumber sold to construction firms would be included in the calculation of gross domestic product (GDP) because it is a physical good produced domestically and sold as an intermediate input in the construction industry.
French fries sold to customers at a restaurant would also be included in the GDP calculation as it represents a final good produced domestically and sold directly to consumers.
Steel sold to an automobile manufacturer would be part of the GDP calculation as a physical good sold to a business for further production.
Chemicals sold to pharmaceutical developers would be included in GDP as they are intermediate goods used in the production of pharmaceutical products.
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Final answer:
GDP calculations include the value of final goods and services only, such as hospital stays and new car sales. Intermediate goods and non-market activities, like the iron used to make steel or childcare by relatives, are not included in GDP.
Explanation:
The calculation of Gross Domestic Product (GDP) includes the value of final goods and services in the chain of production that are sold for consumption, investment, government, and trade purposes. Intermediate goods, which are goods that go into producing other goods, are excluded from GDP calculations. Therefore, to determine which of the following are included in GDP:
- The cost of hospital stays: Included (as it is a final service)
- The rise in life expectancy over time: Not Included (as this is not a good or service)
- Child care provided by a licensed day care center: Included (as it is a service sold to consumers)
- Child care provided by a grandmother: Not Included (as it is typically considered a non-market activity)
- A used car sale: Not Included (as it is not a new production)
- A new car sale: Included (as it is a new production sold to the consumer)
- The greater variety of cheese available in supermarkets: Not Included (as variety does not have a direct monetary value)
- The iron that goes into the steel that goes into a refrigerator bought by a consumer: Not Included (as it is an intermediate good but the final refrigerator is included)
Only the value of final products like the hospital stay or the new car sale are counted in GDP calculations. Intermediate goods such as iron used in steel or the variety of products available are not counted directly, as their value is included in the final goods or services.
