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

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Business

Tanner Hood

17 October, 09:34

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

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Answers (1)

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Drake Haney · Answer 1

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).