Transactions That Are Not Included in Gross Domestic Product
b) Briefly explain any FOUR (4) transactions that are not included in Gross Domestic Product (GDP) measures.
- Nonmarket Goods and Services
-There is no exchange of money involved.
-For example, dinner prepared by mum or chores performed at home by family members.
- Government or Private Transfer Payments
-Transfer payment is payment make to a person that is not made in return for goods and services currently supply.
-For examples, social security benefits, private transfer payments (cash gifts, angpau) and government transfer payment (pension, veteran benefit, unemployment benefits).
- Financial Transactions
-There is no new production of assets.
-Trading of stocks/shares and bonds is not counted because it does not represent the production of new assets. It only involves swapping or changing bits of paper.
- Underground activities, both Legal and Illegal
Legal
-Both party reach agreement to give each other benefit but not involving money transactions.
-For examples, Ali made an agreement with Alan. Ali will help Alan to paint the house while Alan will fix Ali car. Both parties receive benefits from each other and did not receive money.
Illegal
-Because no record exists.