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Then you increase the GDP, the nominal measure of the economy. This is not rocket science. If person A mines aluminum and sells it to person B for $10. And pe

Then you increase the GDP, the nominal measure of the economy. This is not rocket science. If person A mines aluminum and sells it to person B for $10. And person B sells person A wheat for $5. And then person A sells person B bread for $8, and person B sells a metal box to A for $12. And this is the entirety of the economic activity in country X, then country X's economy is $35 in size. You can sell the same 'stuff' back and forth. A more contrived example. Suppose person A makes water bottles. He sells to person b for $10. Then person A goes on vacation. At a concession stand run by person B, person A needs water, which he buys from person B for $4 each. Person B has added value to the same 'stuff' person A sold him simply by moving it. The 'good' being sold by person B is simply the transport of the good sold by person A, which is not subject to the same limitations as number of particles. There are many ways in which things can be moved or repositioned to add value.

mewpmewp2 5y ago
What if I need a water bottle for a minute. I buy it for $5, then I resell it for $5 and so does every following person? Surely each transaction shouldn't add $5 for GDP? What if it is an extremely valuable water bottle. Let's say it costs $10,000 as it's made out of gold. Let's say it gets transferred similarly as everyone needs it for just 1 minute just to use it to fill it and take a sip.
fallingfrog 5y ago
If you look up how gdp is measured, you will find that they measure the total of transactions for the final consumer, for exactly the reasons I’ve listed. From the IMF: “ Theoretically, GDP can be viewed in three different ways: The production approach sums the “value-added” at each stage of production, where value-added is defined as total sales less the value of intermediate inputs into the production process. For example, flour would be an intermediate input and bread the final product; or an architect’s services would be an intermediate input and the building the final product. ● The expenditure approach adds up the value of purchases made by final users—for example, the consumption of food, televisions, and medical services by households; the investments in machinery by companies; and the purchases of goods and services by the government and foreigners. ● The income approach sums the incomes generated by production—for example, the compensation employees receive and the operating surplus of companies (roughly sales less costs).” So, sorry but you are mistaken about this, I’ve been trying to get you to understand this but you’re not paying attention. So in my hot dog example, you’re not supposed to count anything as gdp other than the final sale to the person who ate the hot dog. Or you can measure it one of the other two ways listed but you’ll get the same answer.

mewpmewp2 5y ago

What if I need a water bottle for a minute. I buy it for $5, then I resell it for $5 and so does every following person? Surely each transaction shouldn't add $5 for GDP? What if it is an extremely valuable water bottle. Let's say it costs $10,000 as it's made out of gold. Let's say it gets transferred similarly as everyone needs it for just 1 minute just to use it to fill it and take a sip.

fallingfrog 5y ago

If you look up how gdp is measured, you will find that they measure the total of transactions for the final consumer, for exactly the reasons I’ve listed. From the IMF: “ Theoretically, GDP can be viewed in three different ways: The production approach sums the “value-added” at each stage of production, where value-added is defined as total sales less the value of intermediate inputs into the production process. For example, flour would be an intermediate input and bread the final product; or an architect’s services would be an intermediate input and the building the final product. ● The expenditure approach adds up the value of purchases made by final users—for example, the consumption of food, televisions, and medical services by households; the investments in machinery by companies; and the purchases of goods and services by the government and foreigners. ● The income approach sums the incomes generated by production—for example, the compensation employees receive and the operating surplus of companies (roughly sales less costs).” So, sorry but you are mistaken about this, I’ve been trying to get you to understand this but you’re not paying attention. So in my hot dog example, you’re not supposed to count anything as gdp other than the final sale to the person who ate the hot dog. Or you can measure it one of the other two ways listed but you’ll get the same answer.