--%>
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 Uniform Codes Manual Uniform

    Uniform Codes Manual (UCM): It is a document sustained by the Department of Finance that sets standards for codes and different other information employed in state fiscal reporting systems. Such codes recognize, for illustration, prog

    		•
  • Q : Explain Generally Accepted Accounting

    Generally Accepted Accounting Principles (GAAP): The accounting rules, principles, conventions, and procedures which are employed for accounting and financial reporting. The GAAP for governments are put by the Governmental Accounting Standards Board (

    		•
  • Q : Define Allocation Allocation : The

    Allocation: The distribution of funds or costs from one account or misuse to one or more accounts or appropriations (example, the allocation of employee compensation funding from the statewide 9800 Budget Act items to the departmental Budget Act items

    		•
  • Q : Creative destruction Normal 0 false

    Normal 0 false false

    		•
  • Q : Explain compound interest Normal 0

    Normal 0 false false

  • Q : What is Prior Year Adjustment Prior

    Prior Year Adjustment: An adjustment for the difference among prior year accruals and real expenditures or revenues. The previous year adjustment amount is usually comprised in the Fund Condition Statements as an adjustment to realign the starting fun

    		•
  • Q : How does depreciation influence cash

    Normal 0 false false

    		•
  • Q : What is Change Book System Change Book

    Change Book System: The system the Department of Finance employs to record all the legislative modifications (comprising changes stated by the Administration and approved by the Legislature) made to the Governor's Budget and the last actions on the bu

    		•
  • Q : Explain Equity Financing Equity

    Equity Financing: New or small businesses might find it hard to get debt financing therefore they turn to equity funding. The Equity financing frequently comes from non-professional investors like family, friends, or employees. This can as well come f

    		•
  • Q : Explain Detailed Budget Adjustments

    Detailed Budget Adjustments: Department Detailed Budget Adjustments are comprised in department budget displays to give the reader a snapshot of proposed expenses and position adjustments in the department, why tho

    		•