What is meant by a final good or service as opposed to an intermediate good or service? Why are only final goods and services included in the calculation of GDP?
A final good is a good purchased by its final user, while an intermediate good is a good used in the production of a final good. Only final goods are included to avoid double counting. The price of a tire purchased by Ford, for example, is reflected in the final cost of the vehicle and will be counted at that point. If Ford's purchase was also counted, the tire would be counted twice.
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According to your textbook, rent controls on apartments
A) produce fair outcomes. B) create problems of their own. C) tend to promote efficiency. D) do both B and C. E) do none of the above.
An example of a supply shifter is:
A) demographic characteristics. B) technology. C) income. D) consumer expectations.
Under adaptive expectations theory, people persistently:
A. underestimate inflation when it is slowing down. B. overestimate inflation when it is accelerating. C. underestimate inflation when it is accelerating. D. adapt to the prevailing inflation rate.
The various lender-of-last-resort programs implemented by the Fed in response to the financial crisis of 2007 and 2008:
A. severely depleted the assets of the Federal Reserve. B. have been little used, and therefore are ineffective. C. increased the moral hazard problem by limiting losses from bad financial decisions. D. were designed to offset the moral hazard created by the TARP and other bailout programs.