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Principles of Economics (MindTap C...

8th Edition
N. Gregory Mankiw
Publisher: Cengage Learning
ISBN: 9781305585126

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BuyFindarrow_forward

Principles of Economics (MindTap C...

8th Edition
N. Gregory Mankiw
Publisher: Cengage Learning
ISBN: 9781305585126
Chapter 23, Problem 4PA
Textbook Problem
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As the chapter states, GDP does not include the value of used goods that are resold. Why would including such transactions make GDP a less informative measure of economic well-being?

To determine
Why the resale of goods once purchased is not included in the GDP.

Explanation of Solution

GDP is the summation of monetary value of all the final goods and services that are produced by the country within its political boundary, within a financial year. Thus, it will take all the final goods and services produced in a year in the country into account.

The sale of the good or service will be included in the GDP of the economy in the year in which it is produced. Thus, the goods will be added to the GDP of the year in which the commodity was produced...

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