Which of the following is NOT included in Gross Domestic Product (GDP) as it is commonly measured?

• A. Government spending on public-school teacher salaries for services provided during the year
• B. The value of unpaid household work, such as cooking and cleaning performed within the home
• C. The market value of newly produced final goods and services sold in legal markets during the year
• D. Business investment spending on new machinery produced during the year

Answer: (B)

Verified step by step guidance

1. Step 1: Understand the definition of GDP. GDP measures the total market value of all newly produced final goods and services within a country during a specific period, usually a year.
2. Step 2: Identify what types of spending are included in GDP. This includes government spending on services (like public-school teacher salaries), business investment in new machinery, and the market value of final goods and services sold legally.
3. Step 3: Recognize what is excluded from GDP. Non-market activities, such as unpaid household work (e.g., cooking and cleaning done within the home), are not included because they do not involve market transactions and thus have no market price.
4. Step 4: Analyze each option to see if it fits the GDP criteria: government spending on teacher salaries is included, market value of final goods and services sold is included, business investment spending on new machinery is included, but unpaid household work is excluded.
5. Step 5: Conclude that the value of unpaid household work is NOT included in GDP as it is commonly measured because it lacks a market transaction and market price.