--%>
Assignment Help - homework help

Measuring net output GDP in a specific year

Why do national income accountants comprise only final goods in measuring net output GDP in a specific year? Why don't they comprise the value of stocks and bonds bought & sold? Why don't they comprise the value of utilized furniture bought and sold?

E

Expert

Verified

They are excluded since the dollar value of ultimate goods includes the dollar value of intermediate goods. If intermediate goods were counted, then multiple counting would take place. The value of steel (intermediate good) utilized in autos is included in the price of the auto (the final product).

     This value is not comprised in GDP since such sales and purchases simply transfer the ownership of existing assets; such purchases and sales are not themselves (economic) investment and therefore should not be counted as production of ultimate goods and services.

     Utilized furniture was generated in some previous year; it was counted as GDP then. Its resale does not measure new production.

   Related Questions in Finance Basics

  • Q : What is FERA FERA stands for The

    FERA stands for The Federal Emergency Relief Administration. The program was renamed as a direct relief operation in Roosevelt Administration. It was a form of an unemployment insurance.

    		•
  • Q : Explain agents and their

    Normal 0 false false

    		•
  • Q : Chartered bank loan policy Normal 0

    Normal 0 false false

  • Q : Surpluses drive prices up- shortages

    Normal 0 false false

  • Q : Semiannua compounding It is now January

    It is now January 1. You plan to make a total of 5 deposits of $600 each, one every 6 months, with the first payment being made today. The bank pays a nominal interest rate of 14% but uses semiannual compounding. You plan to leave the money in the bank for 10 years. How much will be in your account

    		•
  • Q : Compare and contrast the book value and

    Compare and contrast the book value & liquidation value per share for common stock. Is one method more reliable? Describe.The Book Value of a firm's common stock is found by subtracting the value of the firm's liabilities, and preferred stoc

    		•
  • Q : What is Debt Financing Debt Financing :

    Debt Financing: Whenever a firm raises money for the working capital or capital expenses by selling bonds, bills, or notes to individual and or institutional investors. In return for lending money, the individuals or institutions become creditors and

    		•
  • Q : Question based on imposesing tax Given

    Given equations describe market for widgets                         Demand: P = 10 - Q Supply: P = Q - 4

    Q : Explain Governors Budget Summary or

    Governor's Budget Summary (or A-Pages): This is a companion publication to the Governor’s Budget which outlines the Governor’s goals, policies, and objectives for the budget year. This gives a perspective on important fiscal and/or structu

    		•
  • Q : How do financial managers compute the

    How do financial managers compute the average tax rate?Average tax rates are calculated through dividing tax dollars paid by earnings before taxes (EBT).

    		•