Question

We know that GDP is the value of final goods and services produced in the economy...

We know that GDP is the value of final goods and services produced in the economy in a given year. Briefly explain how the following are treated in the measurement of GDP: a) The value of intermediate goods; b) The value of financial transactions (like depositing money in the bank); c) The value of self-produced goods, like home child care; and d) the value of leisure activities.

Homework Answers

Answer #1

Given by definition that GDP is the final value of all the goods and services produced in an economy in the given period,

(a) The value of intermediate goods is not included in the calculation of GDP. This is because they may have been already included by the previous supplier as a final good and hence we should avoid the problem of double counting.

(b) Financial transactions such as the deposit of money into bank accounts is not included in the calculation of GDP since they do not involve production.

(c) Self-produced goods like childcare which is not paid for but done by ourselves for our own child is not included as GDP due to lack of payment for these services.

(d) Since leisure does not come with a fixed price tag, hence it is not included in the calculation of GDP.

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
The value of all new final goods and services produced in a given period by the...
The value of all new final goods and services produced in a given period by the country’s citizens is CPI NNP GDP GNP
Select the correct answer: The market value of all the final goods and services produced within...
Select the correct answer: The market value of all the final goods and services produced within a country in a given time period is (GDP; investment). (Net exports of goods and services; Net Taxes) equals the value of exports minus the value of imports. (Real; Nominal) GDP values production during the year using constant prices while ____ (real; nominal) GDP values production using prices that prevailed during the year. (Consumption expenditure; Investment) is the largest component of GDP. (Real GDP...
The Gross Domestic Product or GDP is the monetary measure production of final goods and services...
The Gross Domestic Product or GDP is the monetary measure production of final goods and services within the boundary of the United States in a financial year or specific period. The GDP tells us if the economy is expanding due to producing more goods and services or contracting due to less output. Anything that it is built in the United States contributes to the figures instead of abroad. The Gross Domestic Product or GDP does not measure the quality of...
Gross Domestic Product is the sum total value of all final goods and services produced and...
Gross Domestic Product is the sum total value of all final goods and services produced and sold on an organized market during a specified period of time. Suppose that, in 2014, Latveria produced one car priced at 10000 and two bicycles priced at 500 each and nothing else. Then, adding these values, its nominal GDP in 2014 was 11000. Suppose that, in 2015, Latveria produced one car priced at 12000 and one bicycle priced at 1000 and nothing else. What...
_________GDP is the total value of production? (final goods and? services) using current prices. Consider an...
_________GDP is the total value of production? (final goods and? services) using current prices. Consider an illustrative economy that produces luxury pens. Assume that in 2012 this economy produced 30 luxury pens at a market price of $300 per pen. In 2013?, the number of luxury pens produced remains the same but the market price has increased to ?$400 per pen. If 2012 is the base? year, the real GDP in 2013 is $________ The nominal GDP in 2013 has...
13. adding up the market values of all final goods and services produced will result in...
13. adding up the market values of all final goods and services produced will result in the same answer as_____. a. summing all consumption and investment b. summing the expenditures on all goods and services produced on the economy c. summing physical output of all goods and services d. summing all consumption, investment, government spending, and exports e. summing the value added of all firms in the economy
Why do we not count the value of intermediate goods and services in gross domestic product?...
Why do we not count the value of intermediate goods and services in gross domestic product? Does the value of intermediate goods and services show up in gross domestic product? If so, how? Briefly explain.
1. Nominal GDP increases from year 1 to year 2. Therefore: a.) We produced more goods...
1. Nominal GDP increases from year 1 to year 2. Therefore: a.) We produced more goods and services in year 1 b.) We produced more goods and services in year 2 c.) It is not possible to determine in which year we produced a greater quantity of goods and services 2. Net export spending will have a negative value when the country exports more goods than it imports from other countries. T/F 3. A firm produces 100 units of some...
If we were to add up the value of output of all production of goods and...
If we were to add up the value of output of all production of goods and services in the economy, we would: obtain GDP at factor cost. obtain GDP at market prices. obtain GDP using the income method. overestimate the value of production taking place in the economy. underestimate the value of production taking place in the economy. The               demand for money arises out of the need to hold money as a medium of exchange. This demand for money is...
15. What will happen to the supply curve is there is an increase in the number...
15. What will happen to the supply curve is there is an increase in the number of sellers in a market (all else being equal)?                    Supply will shift outward           Supply will shift inward           Supply will shift upward           Supply of the good will not change             16. Suppose during the course of a year an economy produces $8 trillion of consumer goods, $3 trillion of investment goods, $4 trillion in government services, and has $2 trillion of exports and...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT