- Circular flow of income and expenditures
- Parsing gross domestic product
- More on final and intermediate GDP contributions
- Investment and consumption
- Income and expenditure views of GDP
- Value added approach to calculating GDP
- Components of GDP
- Expenditure approach to calculating GDP examples
- Examples of accounting for GDP
- Measuring the size of the economy: gross domestic product
- Lesson summary: The circular flow and GDP
- The circular flow model and GDP
In this video, we explore how purchases of different things affect GDP, or why they wouldn't!.
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- if the net exports are decreasing, how does it not affect the GDP ? (in example 3)(11 votes)
- In the case of imported goods, they actually appear twice in the calculation. For example, if I (in the US) buy a car made in India, it gets counted in consumption because it is spending by a household. It is then subtracted from US GDP because it wasn’t actually produced in the US. Therefore, there is no net impact.(11 votes)
- Why does it not count as expenditure of a household when one buys a stock of a particular company? Should that expenditure not count as consumption and add to the GDP?(3 votes)
- Stock is not something that is produced or consumed, it just gets passed around from one owner to another,.(9 votes)
- Why The social security administration make a payment does not effect the GDP? The payments are for retiree, the retiree will then consume something, doesnt it increase the GDP?(4 votes)
- When the retiree consumes something, it will increase the GDP. But you were not asked to determine that, you were asked to determine if the SSA's payment directly impacts the GDP which it doesn't.
Hope this helps!(2 votes)
- Are bonds also not counted in GDP?(3 votes)
- In the expenditure approach to calculating GDP examples,
when the Social Security Administration buys a new accounting system, is it still correct to say the GDP of the country increases if it isn't indicated where this new accounting system was produced? In the other examples above, the location of production is specified.(3 votes)
- Presumably, if it (and all associated services) were bought from outside the country, it would not affect the GDP (Like other imports/Negative Exports).(1 vote)
- So, when the government pays salary does it increase GDP? Because salary is the payment for the services rendered by the individual.(3 votes)
- From my understanding, when the government pays a salary for services rendered by individuals, it does increase GDP. The payment for services, including salaries, is a component of government spending, which is a part of GDP calculations.(1 vote)
- How do you account for goods and services that are consumed by the producer, with no money changing hands?(2 votes)
- If there's no money changing hands or the transaction isn't recorded, then it won't be calculated in GDP since there isn't a transaction record to look at. Usually, this happens in underground economy or black market. Often, it also happens inside a household, for ex: a mother who clean and cook for the family won't show up in GDP. But a housekeeper who essentially provides the same service will show up in GDP since the transaction is recorded (she received wages).(2 votes)
- If Ford pays $1M for a Japan made robot for its factory in California, this will also have no effect in GDP as it would account as +$1M in investment and -$1M in import, right?
Also, what happens when a product, for instance, snack worth $1 made in Japan is consumed by an individual in California, would it also have no effect in GDP as it would account as +$1 in consumption and -$1 in import?(2 votes)
- What if, someone buys a second hand car from another person. Will that be counted in GPD as here nothing new is produced?(1 vote)
- Two things. with value addition and without value addition . Point being that, any normal product depreciates in value due to consumption be it wear and tear, or other consumption metric. Now , if the car is bought for $10000 and used for 5 years and then sold for 4000$ ,then no value addition here because $6000 worth consumption is already done and you sold remaining $4000 worth good for which you already paid and is already counted in GDP. However , if you do some repairs yourself, buy and change some parts, paint it, then you have provided a service, and that limited value addition (your labor + parts cost + paint cost) should be counted towards GDP.
P.S. but it's hardly counted in practice because it will not be usually recorded formally and counted.(3 votes)