Answer to Question #235568 in Macroeconomics for Ross

Question

Why do national income accountants include only final goods in measuring total output GDP in a particular year? Why don’t they include the value of stocks and bonds bought and sold? Why don’t they include the value of used furniture bought and sold?

Answer 1

The finals goods are only included in measuring GDP for a particular year because the ownership of items is only changing. If intermediate goods were counted, then multiple counting would occur, indicating a rise in GDP than it is. The value of used furniture bought and sold is not included in the GDP because of the transfers of existing asset ownership. The money doesn't pay for the production but the change in furniture ownership.