Why is the value added by each producer included in the calculation of GDP instead of his sales revenue?

What will be an ideal response?


The revenue or final value of a good includes the value added at each stage of the production process. It is not possible to find out the contribution of each producer in the production process if only the revenue earned by the firm selling the final good is tracked. Therefore, the value added by each producer is included in the calculation of GDP.

Economics

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If the marginal benefit of reducing emissions of some air pollutant is less than the marginal cost

A) economic efficiency will be increased if further reductions are made. B) pollution taxes should be imposed on producers to pay for further reductions. C) further reductions will make society better off. D) further reduction will make society worse off.

Economics

The "Greenspan doctrine"—central banks should not try to prick bubbles—was based on which of the following arguments?

A) Asset-price bubbles are nearly impossible to identify. B) Monetary actions would be likely to affect asset prices in general, rather than the specific assets that are experiencing a bubble. C) Raising interest rates has often been found to cause a bubble to burst more severely. D) Monetary policy actions to prick bubbles can have harmful effects on the aggregate economy. E) All of the above.

Economics

The school of engineering at a modern university would be a supporter of the new

a. consumption theory. b. growth theory. c. monetary theory. d. construction theory.

Economics

Identify the relationship between GDP, taxes, and disposable income.

What will be an ideal response?

Economics