Which of the following is is included in the calculation of Canadian GDP as part of consumption?
Carl and Beck Lane live in Halifax. Their son, Victor, owns his own plumbing business.
Carl buys a sweater made in Guatemala.
Carl's employer assigns him to provide consulting services to an Australian firm that's opening a manufacturing facility in China.
Becky gets a new video camera made locally.
The province of Nova Scotia repaves highway 102, which connects Halifax and Halifax Stanfield international airport.
Victor buys a new set of tools to use in his plumbing business.
2 Answers | Add Yours
Gross Domestic Product (GDP) is made up of the expenditures by consumers, governments, and by businesses (on capital investment). It is also includes net exports (exports minus imports).
Of the transactions that you list, only Becky’s purchase of the video camera would be counted in Canada’s GDP. The sweater is a consumer good, but it is an import. The work that Carl does is spending by a business. The road is government spending. The new set of tools is also business spending because Carl is not buying those tools as a consumer. If he bought them to use at home, they would be part of consumer spending.
Canadian GDP (Gross Domestic Product) is the financial value of all the finished goods and services produced within Canada in a particular period of time, typically a year. GDP includes all of public and private consumption, investments, government expenditures, and exports minus imports, which transpire within a demarcated territory.
Therefore, the following is included in the calculation of Canadian GDP as part of consumption:
1. I believe that Carl’s employer assigning him to provide consulting services to an Australian firm that's opening a manufacturing facility in China would be part of the Canadian GDP calculation as it is a service produced in Canada and exported to Australia.
2. Becky purchasing a new video camera made in Canada (Halifax, Nova Scotia) is a part of the Canadian GDP calculation because it is a finished good that was manufactured in Halifax.
3. The Province of Nova Scotia repaving highway 102 that connects Halifax and Halifax Stanfield International Airport is part of the Canadian GDP calculation because it is a government expenditure.
4. Victor buying a new set of tools to use in his plumbing business may be a part of the Canadian GDP calculation if the plumbing tools were manufactured in Canada.
However, Carl purchasing a sweater manufactured in Guatemala is not considered a part of Canadian GDP because it is not a good that was made in Canada.
We’ve answered 288,358 questions. We can answer yours, too.Ask a question