Which of the following is NOT included in a country’s GDP?

• A. Spending by firms on new machinery and equipment
• B. The value of unpaid household work (such as cooking and childcare done at home)
• C. The market value of bread sold by a bakery to consumers
• D. Government spending on public school teacher salaries

Answer: (B)

Verified step by step guidance

1. Step 1: Understand what GDP (Gross Domestic Product) measures. GDP is the total market value of all final goods and services produced within a country during a specific period.
2. Step 2: Identify the types of activities included in GDP. These typically include consumption by households, investment by firms (such as spending on new machinery and equipment), government spending on goods and services, and net exports.
3. Step 3: Recognize that GDP only includes market transactions where goods and services are bought and sold at market prices. This means that unpaid work, such as household chores or childcare done within the home, is not included because it does not involve a market transaction.
4. Step 4: Analyze each option: spending by firms on new machinery and equipment is investment and included; the market value of bread sold by a bakery is consumption and included; government spending on public school teacher salaries is government expenditure and included; unpaid household work is not a market transaction and therefore excluded.
5. Step 5: Conclude that the value of unpaid household work is NOT included in GDP because it does not have a market price and is not part of measured economic activity in the national accounts.