Sam, an American citizen, prepares meals for his family at home. Ellen, a Canadian citizen, commutes to the U.S. to help prepare meals at a restaurant in Idaho. Whose value of services preparing meals is included in U.S. GDP?
In this case, both Sam's and Ellen's value of services preparing meals would be included in U.S. GDP. Sam's services are considered part of the domestic economy because he is an American citizen preparing meals for his family at home. Ellen's services, on the other hand, contribute to U.S. GDP because she is a Canadian citizen commuting to the U.S. and helping prepare meals at a restaurant in Idaho.
In the case described, Sam's value of services preparing meals at home is not included in the U.S. GDP. This is because GDP only measures the value of goods and services produced within the country's borders for final consumption or investment. As Sam prepares meals at home for his family, it is considered non-market production and is not part of the formal economic transactions captured in GDP.
On the other hand, Ellen's value of services preparing meals at a restaurant in Idaho will be included in the U.S. GDP. This is because Ellen is engaged in market production, providing a service at a restaurant for monetary compensation. As a result, the value of her services is considered part of the country's GDP.
To determine whose value of services preparing meals is included in U.S. GDP, we need to understand the concept of GDP and how it is calculated.
Gross Domestic Product (GDP) is a measure of the total value of all goods and services produced within a country's borders during a specific period, usually a year. It represents the economic output of a country.
Now let's analyze the two situations:
1. Sam, an American citizen, prepares meals for his family at home:
The value of services Sam provides by preparing meals at home is not included in the calculation of GDP. GDP only includes economic activities that involve market transactions. Since preparing meals for his family at home does not involve a market transaction, it is not considered in GDP.
2. Ellen, a Canadian citizen, commutes to the U.S. to help prepare meals at a restaurant in Idaho:
In this case, the value of services Ellen provides by preparing meals at a restaurant in the U.S. is included in U.S. GDP. As Ellen is working at a restaurant, which is a commercial establishment involved in market transactions, her contribution to the production of meals is considered as part of the country's GDP.
To summarize, only the value of services provided by Ellen in the U.S. is included in the U.S. GDP, while the value of services provided by Sam at home is not included.