Which of the following activities is are excluded from calculation Gross Domestic Product...........

Economic Affairs Growth and Indicators

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Which of the following activities is/are excluded from calculation Gross Domestic Product?

1. Sale of a new car

2. Purchase of tyre by a car manufacturer

3. Buying share of a car company

4. Profits earned by a foreign-owned car company

Which of the above statement(s) is/are correct?

1 and 4 only

2 and 3 only

1 and 2 only

1, 2 and 4 only

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Explanation:

Sale of a new car is calculated in GDP because it is a final good. Purchase of tyre by a car manufacturer is an intermediate good for a car and hence not included in GDP. Buying share of a car company is a transaction in financial products without any real capital or product formation. Hence, it is also excluded from GDP calculation. Profits earned by a foreign-owned car company are included in GDP as it is within the domestic territory of an economy. Hence, only 2 and 3 are excluded from GDP calculations.