Question

Decide for each item whether it is part of GDP and, if so, to which expenditure category it belongs.Purchase of 100 shares of General Motors stock

Answer 1

Answer:

NO , 100 shares purchase of GMS is not included in GDP

Explanation:

GDP is gross value of final goods & services produced by an economy in its domestic territory during a financial year .

Purchase of 100 Shares of General Motor stock is not included in GDP : Because it does not lead to any new production of goods & services , is mere transfer of ownership from company to shareholders . Similarly , Debenture selling is also not included

It is analogous to the rule of excluding second hand goods from GDP , since they have not lead to any new goods / services & are mere transferred from one owner to another .

However , any Brokage fee / commission paid related to either of these is included because it is factor income for a productive intermediary service. Also , returns on shares i.e Dividend (or even Interest on debetures) are included - since these are factor income to factors of production (capital component share) .