Explain why only final goods are included in GDP.
What will be an ideal response?
Final goods are those that are sold to ultimate or final purchasers as opposed to intermediate goods, which are goods that are used in the production process. Suppose for example that a farmer grows potatoes and then sells them to a fast food chain that uses them to make fries, which are then sold to the public. If both the potatoes and the fries were counted then the same thing would be counted twice; in other words, the potatoes would be counted when they were potatoes and then again when they were in the form of the fries. In order to avoid this double counting only the final goods are included in GDP.
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Which will NOT affect the elasticity of demand for labor?
A) the labor intensity of the production process B) the elasticity of supply for labor C) the elasticity of demand for the good D) the substitutability of capital for labor
Jackie, a Canadian citizen, works only in the United States. The value of the output she produces is
a. included in both U.S. GDP and U.S. GNP. b. included in U.S. GDP, but it is not included in U.S. GNP. c. included in U.S. GNP, but it is not included in U.S. GDP. d. included in neither U.S. GDP nor U.S. GNP.
______ involves purchases that add to the stocks of goods kept by the firm to meet consumer demand.
a. Durable investment b. Capital investment c. Inventory investment d. Fixed investment
The multiplier effect on real GDP occurs because
What will be an ideal response?