How many of the following items are included in the calculation of a country’s Gross Domestic Product (GDP) as per standard national accounting practices?
1. The purchase of a new car by a household.
2. The resale of a used house.
3. Imputed rent foregone by the owner living in his own house.
4. Wages paid to employees of foreign origin by a domestic company in India.

Select the correct answer using the options given below:
(a) Only one
(b) Only two
(c) Only three
(d) All four

Question

How many of the following items are included in the calculation of a country&rsquo;s Gross Domestic Product (GDP) as per standard national accounting practices?
1. The purchase of a new car by a household.
2. The resale of a used house.
3. Imputed rent foregone by the owner living in his own house.
4. Wages paid to employees of foreign origin by a domestic company in India.

Select the correct answer using the options given below:
(a) Only one
(b) Only two
(c) Only three
(d) All four

ONLiNE UPSC · Accepted Answer

Item 1 is correct: The purchase of a new car by a household is included in GDP and it represents consumption of newly produced goods.

Item 2 is not correct: The sale of a used house is not included in GDP as used goods are excluded from GDP because they were counted when first produced.

Item 3 is correct: Imputed rent foregone by the owner living in his own house is included in GDP.
This is a standard inclusion in GDP to reflect the value of housing services consumed by homeowners, even if no actual rent is paid.

Item 4 is correct: Wages paid to employees of foreign origin by a domestic company are included in GDP, as long as the production of goods or services happens within the domestic economy (i.e., within the country's borders). This is consistent with the expenditure and income approaches to GDP calculation.

Macroeconomics

Gross Domestic Product (GDP)

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M Question 1	⏱ 0
How many of the following items are included in the calculation of a country’s Gross Domestic Product (GDP) as per standard national accounting practices? 1. The purchase of a new car by a household. 2. The resale of a used house. 3. Imputed rent foregone by the owner living in his own house. 4. Wages paid to employees of foreign origin by a domestic company in India. Select the correct answer using the options given below: (a) Only one (b) Only two (c) Only three (d) All four

Macroeconomics

Gross Domestic Product (GDP)

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