MGEA05H3 Chapter Notes - Chapter 20: National Accounts, Pension, British Association For Immediate Care
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7 Apr 2015
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The error that would arise in estimating the nation"s output by adding all sales of all firms: production occurs in stages some firms produces outputs that are used as inputs by other firms. If we merely add up the market values of all outputs of all firms, we would obtain a total greatly in excess of the value of the economy"s actual output. The problem of double-counting can be solved by distinguishing intermediate and final goods simply add up the value of final goods to get the total output. Intermediate goods: all outputs that are used as inputs by other producers in a further stage of production, tires, leather, brakes , steel. Final goods: goods that are not used as inputs by other firms but are produced to be sold for consumption, investment, government, or exports during the period under consideration, cars. It is extremely difficult if not impossible to distinguish final from intermediate goods.
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