CHAPTER 22MEASURING A NATION’S INCOME497drugs. It also excludes most items that are produced and consumed at home and,therefore, never enter the marketplace. Vegetables you buy at the grocery store arepart of GDP; vegetables you grow in your garden are not.These exclusions from GDP can at times lead to paradoxical results. For exam-ple, when Karen pays Doug to mow her lawn, that transaction is part of GDP. IfKaren were to marry Doug, the situation would change. Even though Doug maycontinue to mow Karen’s lawn, the value of the mowing is now left out of GDPbecause Doug’s service is no longer sold in a market. Thus, when Karen and Dougmarry, GDP falls.“FINAL . . .”When International Paper makes paper, which Hallmark then uses to make agreeting card, the paper is called an intermediate good,and the card is called a finalgood.GDP includes only the value of final goods. The reason is that the value ofintermediate goods is already included in the prices of the final goods. Adding the
This is the end of the preview.
access the rest of the document.