ECN 204 Lecture Notes - Pg. 99, Weighted Arithmetic Mean, Gdp Deflator
Document Summary
Service or product counts towards gdp for country it was built/provided in. All services and products must only be counted once. To avoid multiple counting gdp only takes into account final goods. Final goods are goods and services purchased for final use and not for resale or further processing/manufacturing. Intermediate goods are products that are purchased for resale or further processing/manufacturing. Including both types of goods would be multiple counting. Value of final goods includes intermediate goods. Value added is the value of the product sold by a firm less the value of the products purchased and used by the firm to produce the product. Certain monetary transactions don"t count towards gdp because they don"t involve final goods: financial transactions: Public transfer payments: social insurance, welfare, unemployment. Private transfer payments: monetary gifts, parents give cash to kid. Stock market transactions: buying and selling of stocks and bonds: second hand sales: