Question

Joe and Jim purchase vegetables at a grocery store, but Jim also grows vegetables in his back yard. Regarding these two practices, which of the following statements is correct? a.Only Joe’s grocery store purchases are included in GDP. b.Only Joe’s and Jim’s grocery store purchases are included in GDP. c.Joe’s and Jim’s grocery store purchases are included in GDP. The vegetables from Jim’s backyard garden are included at their market value. d.Joe’s and Jim’s grocery store purchases are included in GDP. The vegetables from Jim’s backyard garden are included at their market value, if Jim provides this information.

Answer 1

Answer: b. Only Joe’s and Jim’s grocery store purchases are included in GDP.

Explanation:

The Gross Domestic Product is a measure of economic productivity and is a sum of the market value of all goods produced in an economy in a certain period.

Produce from Jim's garden will not be included as GDP disregards goods produced at home for consumption purposes as those would be too hard to measure. Those goods sold in the market however are included which is why Joe and Jim's grocery store purchases will be included.