Which of the following is NOT included in GDP?
Options
ASale of used cars
BConstruction of new house
CDoctor fees
DTeacher salary
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Determination of National IncomePYQ - Nov 2019 (Inter)Question 114 of 20
All Questions Correct Answer
✅ Option a — Sale of used cars
All Options:
- ASale of used cars
- BConstruction of new house
- CDoctor fees
- DTeacher salary
Detailed Solution & Explanation
To determine which option is not included in GDP, we need to understand what GDP is. GDP, or Gross Domestic Product, is the total value of all final goods and services produced within a country's borders over a specific time period.
• The key phrase here is "final goods and services," which means that only the value of the final product is included in GDP, not the value of any intermediate goods or services.
• Used goods, such as used cars, are not considered final goods because they were already counted in GDP when they were first sold as new cars.
• On the other hand, construction of new houses, doctor fees, and teacher salaries are all included in GDP because they are final goods and services.
• The sale of used cars is an example of an intermediate transaction, which is not included in GDP because it does not represent new production.
The correct answer is the sale of used cars because it does not represent new production and was already counted in GDP when the car was first sold. In contrast, construction of new houses and doctor fees are included in GDP because they represent new production and are final goods and services.
About This Chapter: National Income
Paper
Paper 4: Business Economics
Weightage
15%
Key Topics
Aggregates, Measurement, Keynesian Theory
A crucial chapter covering national income aggregates like GDP, GNP, NDP, NNP, and the methods of measuring national income (Income, Expenditure, and Output methods). It also introduces Keynesian Theory including the concepts of Aggregate Demand, Consumption Function, and the Multiplier.
View Official ICAI SyllabusExam Strategy Tip
Practice numerical questions on GDP/GNP calculations and the Multiplier. These are guaranteed marks in every exam. Also understand the circular flow of income clearly.
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