Question

The gross domestic product (GDP) of the United States is defined as the (wholesale cost of/market value of/cost of producing) all (final and intermediate goods and services produced/final goods and services produced/final good and services consumed) (within the U.S./by U.S. citizens/by U.S.-owned Companies) in a given period of time.
Based on this definition, indicate which of the following transactions will be included in (that is, directly increase) the GDP of the United States in 2017.
Treetopplers, a U.S. lumber company, produces wood at a plant in Oregon on September 19, 2017. It sells the wood to Buildit and Partners, a developer, for use in the production of a new house that will be built in the United States in 2017. (Note: Focus exclusively on whether production of the wood increases GDP directly, and ignore the effect of production of the new house on GDP.)
a) 2017 GDP: Included ________________
b) 2017 GDP: Excluded _______________

Answer 1

Answer:

The correct answer is: market value of; final goods and services produced; within the US.

b. Excluded

Explanation:

The GDP of the US is a tool to measure the amount of final goods and services produced within the geographical boundaries of the US in a given period.  

In the given example, the wood produced is an intermediate good. It is not a final good as it is used for further production of a house. Since it is not final good it will not be included in the GDP. So this production will not cause any change in GDP.