Mary has been working as a housekeeper for John for 6 months at a salary of $1000 per month. John and Mary get married, and Mary continues to take care of the house. How does this affect GDP?

GDP measures the value of goods and services produced within a country. When Mary was paid for her housekeeping, her salary contributed to GDP. After they marry, if she continues the same work without pay, her contribution is no longer counted in GDP, leading to a decrease.

Assume that there is a devastating wildfire in Northern California. Putting out the fire is very expensive, and many homes have to be rebuilt. How does this affect GDP?

GDP will go up because the activities involved in fighting the wildfire and rebuilding homes are counted as economic activities, which contribute to the GDP. This includes spending on services and construction, which are part of the GDP calculation.

Quiz 37: National Income Accounting How to Map the Circulation of Money and Goods

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