Explanation Indirect taxes are collected by the business sector from the household sector and are passed on to the government sector. Hence, it is the income of the government sector and expenditure of the household sector. But since the household sector does not pay it directly to the government, it is not reflected as a direct expenditure of the household sector. To balance the income and the expenditure, indirect taxes are included in the calculation of GDP...

10th Edition

ISBN: 9781285859460

Author: BOYES, William

Publisher: Cengage Learning

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Question

Chapter 5, Problem 12E

To determine

The reason for including indirect tax and capital consumption allowance in the calculation of GDP, despite these being non-income components.

Expert Solution & Answer

Chapter 5 Solutions

Economics:

Ch. 5 - Prob. 1E Ch. 5 - Prob. 2E Ch. 5 - Prob. 3E Ch. 5 - Prob. 4E Ch. 5 - Prob. 5E Ch. 5 - Prob. 6E Ch. 5 - Prob. 7E Ch. 5 - Prob. 8E Ch. 5 - Prob. 9E Ch. 5 - Prob. 10E

Ch. 5 - Prob. 11E Ch. 5 - Prob. 12E Ch. 5 - Why has nominal GDP increased faster than real GDP...Ch. 5 - Prob. 14E

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