Problems with Accurately Counting GDP and Items Not Included 1) No intermediate goods -goods used to make final product 2) GDP inlcudes sales tax 3) Expenditure approve does not reflect changes in quality 4)Does not reflect the vaule to society - PxQ - ignores the impact on people who are neither the producer or the consumer (externality) 5) We care most about real GDP than nominal GDP 6) Parts of GDP are not accurately reported -tips -values of food grown and consumed on the farm -gross sales from home repairs -sefl-employed people's income after adjusting for business expenses -wages earned by government employees Items not included in GDP 1) Sake or purchase of financial transaction 2) Transfer payments -public (govenrment) -private (from friend or family) 3) Sale of used goods 4)Underground activities (illegal) -5-15% of GDP/85-255 billion 5) Non-market activities -doing work and not getting paid
1) No intermediate goods
-goods used to make final product
2) GDP inlcudes sales tax
3) Expenditure approve does not reflect changes in quality
4)Does not reflect the vaule to society
- PxQ
- ignores the impact on people who are neither the producer or the consumer (externality)
5) We care most about real GDP than nominal GDP
6) Parts of GDP are not accurately reported
-tips
-values of food grown and consumed on the farm
-gross sales from home repairs
-sefl-employed people's income after adjusting for business expenses
-wages earned by government employees
Items not included in GDP
1) Sake or purchase of financial transaction
2) Transfer payments
-public (govenrment)
-private (from friend or family)
3) Sale of used goods
4)Underground activities (illegal)
-5-15% of GDP/85-255 billion
5) Non-market activities
-doing work and not getting paid
(information taken from class notes)