Macroeconomics: Principles, Problems, & Policies 20th Edition

Published by McGraw-Hill Education
ISBN 10: 0-07766-077-3
ISBN 13: 978-0-07766-077-2

Chapter 7 - Measuring Domestic Output and National Income - Discussion Questions - Page 169: 4

Answer

Because then the GDP would be overstated if we include the cost of intermediate goods. They do not include the value of stocks and bonds because it is basically the transfer of ownership of pieces of paper from one party to another. Because selling used furniture is also a form of transferring goods from one person to another and does not produce anything.

Work Step by Step

Because then the GDP would be overstated if we include the cost of intermediate goods. They do not include the value of stocks and bonds because it is basically the transfer of ownership of pieces of paper from one party to another. Because selling used furniture is also a form of transferring goods from one person to another and does not produce anything.
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