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Principles Of Macroeconomics (ECON 201) Chapter 6 Problem Set

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Eastern Michigan University

Principles Of Macroeconomics (ECON 201)

1. In the following situations, explain what is counted in this year’s GDP:
(a) You bought a new Wii at GameStop last year and resold it on eBay this year.
When you bought the new Wii last year, the market value of the Wii was included in last year’s
GDP. However, when you sold it on eBay-even though it was sold this year-it is not included in
this year’s GDP. This is because GDP only includes new, not used, _nal goods and services. On
the other hand, the value of the service that eBay provides would be counted in GDP.
(b) You purchase an Investing for Dummies book at Barnes & Noble.
Because you purchased the Investing for Dummies book new, this
should be included in GDP.
(c) You purchase a historic home using the services of a real estate agent.
The value of the home is not included in GDP because it is \historic”
and therefore used. However, the value of the real-estate agent’s services is
included in GDP.
(d) You detail your car so it is spotless inside and out.
This is not included in GDP because it is non-market production.
Though you have provided yourself with a service, no one was paid for this
service. Recall that GDP = income. In this case, because no one earns any
additional income when you detail your car, it is not included in GDP.
(e) You purchase a new hard drive for your old laptop.
The market value of the hard drive is included in GDP, but the value
of your old laptop is not. The value of your laptop was included in GDP when
you bought it new.

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Principles Of Macroeconomics (ECON 201) Chapter 6 Problem Set

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