Explain the difference between final and intermediate goods, and give an example of each
What will be an ideal response?
Final goods are consumption goods, capital goods, and services that are purchased by their final users, rather than for resale or for further processing or manufacturing. The textbook example of a final good is the wool suit bought from a retail store by one of its customers. “Intermediate goods” are goods produced during the year that will be used in the production of something else. In the wool suit example, the value of the wool sold by the sheep rancher was not counted when it was sold to the cloth manufacturer because it would be used in the process of producing the cloth and later the suit. In other words, at the wool stage, the product had not reached its final point of sale for that year.
Other examples would include all sorts of raw materials and wholesale goods as intermediate goods. Any consumer purchase of a good or service domestically produced in the given year would be a final expenditure in the GDP accounts.
You might also like to view...
Which of the following policy actions by the Fed would cause the money supply to decrease?
a. An open-market purchase. b. A decrease in required reserve ratios. c. A decrease in the discount rate. d. None of these.
A decrease in aggregate demand tends to cause a ____ a short run Phillips curve at first, then cause a ____ in the short run Phillips curve as people adjust their expectations. a. Movement up along; upward shift
b. Movement up along; downward shift. c. Movement down along; upward shift. d. Movement down along; downward shift.
Short-run economic growth comes from:
A. Expanding the production possibilities curve. B. A rightward shift of aggregate supply. C. Increased or more efficient use of existing resources. D. A population decrease which increases output per person.
Which of the following would be most likely to cause the per capita income of less-developed countries to rise?
A. development of strong labor unions B. more rapid population growth C. investment expenditures that enhance the human capital of labor force participants D. an international minimum wage law