Author Question: Neither intermediate goods nor used goods are included in GDP. Explain why these expenditures are ... (Read 81 times)

WhattoUnderstand · **on:** Jun 29, 2018

Neither intermediate goods nor used goods are included in GDP. Explain why these expenditures are not included in GDP.

What will be an ideal response?

Question 2

In the figure above, for each CD, the price a consumer is willing to pay is equal to the

A) economy's marginal social cost of producing that CD.
B) consumer's own marginal benefit from consuming that CD.
C) consumer's total consumer surplus.
D) Both answers A and B are correct.

dantucker · **Reply #1 on:** Jun 29, 2018

Answer to Question 1

Intermediate goods and used goods are not included in the measurement of GDP because they do not represent final expenditures on goods and services produced within the relevant time period. Intermediate goods are inputs used in the production of final goods and services. To count them twice would be double counting and inflate the level of GDP. Used goods already have been counted in GDP during the year in which they were produced. They were not produced in the current time period and therefore are not included in GDP.

Answer to Question 2

B