ECONOMICS
GDP
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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toys manufactured in China at a factory owned by a U.S. company.
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cars manufactured in Tennessee at a factory owned by a Japanese automobile company.
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plastic manufactured in a factory in Kentucky and sold to toy manufacturers around the world to make plastic toys.
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cotton cloth manufactured in India and sold to clothes makers in the United States.
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Detailed explanation-1: -Only newly produced goods-including those that increase inventories-are counted in GDP. Sales of used goods and sales from inventories of goods that were produced in previous years are excluded. Only goods that are produced and sold legally, in addition, are included within our GDP.
Detailed explanation-2: -The measurement of GDP involves counting up the production of millions of different goods and services-smart phones, cars, music downloads, computers, steel, bananas, college educations, and all other new goods and services produced in the current year-and summing them into a total dollar value.
Detailed explanation-3: -GDP does not, however, take the national ownership of the business that produces a good or service into consideration. So, a car produced in Kentucky counts as U.S. GDP-even if it is produced by a foreign company; but a car produced in Mexico does not count as U.S. GDP-even if it is produced by a U.S. company.