sruhad patel discussion 10 - Sruhad Patel Discussion 10 1...

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Sruhad Patel Discussion 10 1) Explain why it is the case that the value of intermediate goods produced and sold during the year is not included directly as part of GDP, but the value of intermediate goods produced and not sold is included directly as part of GDP Intermediate goods produced and sold during the year are not included separately as part of GDP because the value of those goods will be included in the value of the final goods produced from them. If the intermediate good is produced but not sold during the year, its value is included as inventory investment for the year in which it was produced. If inventory investment was not included as part of GDP, true production would be underestimated for the year the intermediate good went into inventory, and overestimated for the year the intermediate good is used or sold. 2) Consumption expenditure as the largest expenditure of GDP Consumption is defined as the value of goods and services that people buy. The acts of buying by individuals are aggregated in space and time.
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