RAS question
Which of the following is included in the calculation of GDP? 1. Goods produced for self-consumption 2. Imputed rent of owner-occupied houses 3. Services of housewives
Correct answer: (D) 1 and 2 only.
GDP includes goods produced for self-consumption and the imputed rent of owner-occupied houses, but excludes the unpaid domestic services of housewives.
Explanation
GDP measures production within the economy, so the boundary is wider than only cash sales. The MoSPI manual says goods and services produced during the period are included whether they are marketed, bartered, or produced for own use; it gives agriculture, forestry and fishing products kept for own consumption as examples requiring an imputed value. The same logic applies to housing: rent has to be accounted for even when buildings are owned and occupied by their owners, and owner-occupied buildings carry imputed rent in final consumption expenditure. Household members' own domestic work, however, is outside this production boundary and is excluded because of measurement problems. Therefore, statements 1 and 2 are included, while statement 3 is not.
Why the other options are wrong
- (A) It includes imputed rent correctly, but wrongly treats unpaid services of housewives as part of GDP even though household members' domestic work is excluded from the production boundary.
- (B) It includes goods produced for self-consumption correctly, but misses the imputed rent of owner-occupied houses, which MoSPI says must also be accounted for.
- (C) It overstates the production boundary by adding services of housewives, although such household members' activities are excluded because they are not measured as market production.
Concept
This tests the national income accounting boundary: what is counted through imputation and what remains outside GDP. It recurs in RAS because aspirants often confuse non-market production with unpaid household services.