Thursday

 Mostly summarized from Gregory Mankiw’s Principles of Economics, 5th Ed.

PART 8 The Data of Macroeconomics
Chapter 23 of 36 Measuring A Nation’s Income
Section 6 of 15
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GDP definition breakdown:
·1· GDP is the market value
·2· of all
·3· final
·4· goods and services
·5· produced
·6· within a country
·7· in a given period of time
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·3· FINAL
International Paper makes paper for Hallmark which uses it to make a greeting card.
The paper is an intermediate good.
The card is a final good.
GDP includes only final goods and services value, this is because the value of an intermediate good is included in the final good price.
Counting value of both intermediate and final goods would be double-counting.
An exception arises when an intermediate good is produced and rather than being immediately used is added to a firm's inventory of goods for sale later.
Here, the intermediate good is considered to be final for the date of calculating GDP.
Additions to inventory add to GDP.
When the inventory goods are later used or sold the reductions in inventory are subtracted from GDP.
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·4· GOODS AND SERVICES
GDP includes both
· goods, such as food, clothing, and cars
· services, such as haircuts, housecleaning, and doctor visits
When you buy a music CD by your favorite band you are buying a good and the purchase price is included in GDP.
When you buy a ticket for a concert by the same band you are buying a service and the ticket price is also included in GDP.
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·5· PRODUCED
GDP includes goods and services currently produced.
It does not include transactions for items produced in the past.
When you buy a new car, the value of the car is included in GDP.
If you buy a used car, the value of the car is not included in GDP.
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new car and used car
shinsha to chuukosha