5 Questions
What is used to compute the total value of different goods and services in the national income accounts?
Market prices
Why is the sale of a rare Mickey Mantle card not included as part of GDP?
It represents the transfer of an asset, not an addition to the economy’s income.
What happens to GDP if a bakery hires workers to produce more bread, pays their wages, but fails to sell the additional bread which later spoils?
GDP remains unchanged as the transaction does not alter GDP.
Why is the sale of bread out of inventory similar to the sale of a used good in terms of affecting GDP?
It increases total expenditure and total income.
Why are wholesale prices not used to compute the total value of different goods and services in the national income accounts?
They do not accurately reflect consumer willingness to pay.
Learn about computing Gross Domestic Product (GDP) in a simple economy that produces only bread, and understand the more precise definition of GDP for complex economies that include a vast number of goods and services.
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