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Doesn't GDP measure transactions rather than income? I.e. if everyone just bought stuff back and forth from each other constantly (assuming no taxes on the tra
by spurgu 3y ago
Doesn't GDP measure transactions rather than income?
I.e. if everyone just bought stuff back and forth from each other constantly (assuming no taxes on the transactions) the GDP would shoot up.
- 1980phipsi 3y agoGDP measures final demand of goods and services. It doesn't double-count the intermediate value added.
- spurgu 3y agoHow does "it" perform that magic? Edit: I.e. how does "it" know if people just bought a ton of used cars, or if people were simply selling them back and forth to each other constantly? (and if sales between private persons wouldn't register, imagine dealers being in between every transaction)
- 1980phipsi 3y agoFor used cars, they just don’t incorporate them. They can ask the dealer whether the car sales are for new or used cars. They might incorporate the profit from the transaction (to the extent there is profit) or fees associated with the transaction. But not the value of a used car itself.