ECON 162 10 14 15 Gross Domestic Product GDP A measure of the market value of all final goods and services produced within a country s borders in a year How much is 18 Trillion 18 000 000 000 000 Issues in Calculating GDP 1 Market Value a Value of goods and services at market prices b Provides a common denominator c If no market prices exist value good or service at cost 2 Final Goods and Services a Excludes intermediate goods b Avoids double counting or Use value added approach 3 Non Market Transactions are Excluded a Home production b Goods and services produced inside the home for use inside the home c d Underground economies Illegal markets 4 Non Productive Transactions are Excluded a Sales and purchases of securities b Gifts c Government transfer payments 5 Secondhand Goods are Excluded 6 Goods Produced But Not Sold are Included as Inventory Changes Ways of Measuring GDP Simple Circular Flow Model
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