12 GROSS DOMESTIC PRODUCT

12 GROSS DOMESTIC PRODUCT - SECTION 12: GROSS DOMESTIC...

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Unformatted text preview: SECTION 12: GROSS DOMESTIC PRODUCT GROSS DOMESTIC PRODUCT The market value of all final goods and services produced in the U.S. in a given year . MARKET VALUE: Output valued at selling price GDP is influenced by changes in prices FINAL GOODS AND SERVICES: Goods and services produced for final use by final users Example: New car New tires for my current car Apple that I buy to eat INTERMEDIATE GOODS Goods that are produced by one firm for use in further processing by another firm Examples: Apples purchased by a bakery to make a pie Steel used in making a new car PRODUCED IN THE U.S. All goods and services produced inside the boundaries of the U.S count in GDP Items produced in foreign countries by Americans or American owned firms do not count in GDP IN A GIVEN YEAR We can measure GDP on a monthly, quarterly, yearly basis GDP is a flow over time AVOID DOUBLE COUNTING THE VALUE OF INTERMEDIATE GOODS VALUE ADDED = value of output at end of stage cost of inputs at beginning of stage of production ITEMS NOT COUNTED IN GDP Sales of used goods Purely financial exchanges Government and private transfer payments GOVERNMENT TRANSFER PAYMENTS: Cash payments made by governments to people who do not provide goods or services in exchange for these payments Social security benefits Welfare payments Unemployment compensation Veterans benefits Subsidies to farmers Medicare and Medicaid payments to individuals PRIVATE TRANSFER PAYMENTS Gifts, inheritances, charitable contributions are not included in GDP Some productive activities are omitted from GDP because...
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12 GROSS DOMESTIC PRODUCT - SECTION 12: GROSS DOMESTIC...

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