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Unformatted text preview: What is GDP, or Gross Domestic Product Gross Domestic Product (GDP) is the MARKET VALUE of all FINAL goods and services PRODUCED by factors of production WITHIN A COUNTRY during a GIVEN PERIOD OF TIME. • MARKET VALUE: we cannot add automobiles to personal computers to haircuts, etc. We can add the current market value of these goods. • FINAL: to avoid double counting, National Income Accountants add value added [market value of goods produced minus cost of intermediate goods] at every stage of production • PRODUCED: goods that are produced, but not sold, are recorded as Investment expenditures by firms in the National Income accounts. • WITHIN A COUNTRY: Including production using foreign owned Land and Capital, and foreign workers located within the country. We do not include production in foreign countries using domestic (home) factors of production. Why is GDP both a measure of aggregate income and aggregate output?...
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This note was uploaded on 04/07/2008 for the course ECON 252 taught by Professor Robertholand during the Fall '08 term at Purdue.
- Fall '08
- Gross Domestic Product (GDP)