Registered Environmental Manager (REM) Practice Exam

Which factor is NOT included in GDP calculations?

1. Household work

2. Real estate transactions

3. Government spending

4. Exports

The correct answer is: Household work

Household work is the factor that is not included in GDP calculations. Gross Domestic Product (GDP) measures the total value of all final goods and services produced within a country's borders over a specific time period. It reflects economic activity that contributes to market transactions. Household work, such as cooking, cleaning, and caregiving, typically does not have a market price associated with it and is not traded in formal markets. As a result, it is not captured in the calculations of GDP. The value of this unpaid labor, while significant to the economy and society, falls outside the traditional metrics used in economic analysis. In contrast, real estate transactions, government spending, and exports all involve formal market activities. Real estate transactions contribute to GDP as they generally represent a sale of property, which is a market transaction. Government spending includes expenditures on goods and services, which are also counted in GDP, and exports contribute to the GDP as they represent goods and services produced domestically and sold abroad, thus adding to the overall economic output. Each of these elements reflects measurable economic activity that can be quantified in monetary terms, in stark contrast to the value of household work.