Which of the following would be included in the Gross Domestic Product (GDP) of the United States?

• A. The value of a used house sold in California
• B. The value of stocks purchased by an investor on the New York Stock Exchange
• C. The value of a car produced in Germany and sold in the United States
• D. The value of a new car produced in Michigan and sold to a customer in Canada

Answer: (D)

Verified step by step guidance

1. Step 1: Understand the definition of Gross Domestic Product (GDP). GDP measures the total market value of all final goods and services produced within a country's borders during a specific time period, regardless of who owns the production resources.
2. Step 2: Identify which transactions involve production within the United States. Only goods and services produced domestically count towards U.S. GDP. For example, a new car produced in Michigan is produced within the U.S., so it is included.
3. Step 3: Exclude transactions that do not represent current production. The sale of a used house is a transfer of ownership, not new production, so it is not included in GDP.
4. Step 4: Exclude financial transactions that do not represent production of goods or services. Purchasing stocks is a financial asset transaction and does not reflect production, so it is not included in GDP.
5. Step 5: Exclude goods produced outside the U.S., even if sold domestically. A car produced in Germany is not part of U.S. production, so its value is excluded from U.S. GDP.