For the purposes of GDP accounting, which of the following transactions is included in the calculation of a country's GDP?

• A. The purchase of stocks and bonds
• B. The purchase of a new car produced domestically
• C. The sale of used furniture between individuals
• D. Transfer payments such as unemployment benefits

Answer: (B)

Verified step by step guidance

1. Step 1: Understand what GDP measures. GDP (Gross Domestic Product) is the total market value of all final goods and services produced within a country during a specific period.
2. Step 2: Identify which transactions count towards GDP. Only transactions involving the production of new goods and services within the country are included. This excludes financial transactions like buying stocks and bonds, which are transfers of ownership rather than production.
3. Step 3: Analyze each option: The purchase of stocks and bonds is a financial transaction and does not represent production, so it is excluded from GDP.
4. Step 4: The sale of used furniture is a resale of an existing good, so it does not represent new production and is excluded from GDP.
5. Step 5: Transfer payments such as unemployment benefits are government transfers and do not correspond to production of goods or services, so they are excluded from GDP. The purchase of a new car produced domestically represents the purchase of a newly produced good within the country and is included in GDP.