Why are the following not included in GDP: (a) Jacket sold in the USA but produced in Canada (b) retirement benefits (c) commission-free sale of stock of Apple?
(a) means of production located outside US(b) Transfer payment(c) Transfer payment, nothing produced
(a) The jacket sold in the USA but produced in Canada is not included in GDP because GDP measures the value of goods and services that are produced within a country’s borders. Since the jacket was produced in Canada and not in the USA, it does not contribute to the USA’s GDP.
(b) Retirement benefits are not included in GDP because GDP measures the value of goods and services produced in a period of time, typically a year. Retirement benefits are a transfer payment made by the government or a company to an individual, and they do not reflect the value of any goods or services produced.
(c) The commission-free sale of stock of Apple is not included in GDP because it is a financial transaction that does not involve the production of goods or services. GDP only measures the value of goods and services that are produced within a country’s borders. When a stock is sold commission-free, there is no new production generated, and therefore, it is not included in GDP.