Picture the economy as a giant supermarket, with billions of goods and services inside. At the checkout line, you watch as the cashier rings up the price for each finished good or service sold. What have you just observed?
The cashier is computing a very important number: gross domestic product, or GDP.
GDP is the market value of all finished goods and services, produced within a country in a year.
But, what does "market value" mean? And what defines a "finished good"?
These, and more questions, percolate inside your head. Meanwhile, the cashier starts ringing up the total, and you’re left confused. An array of things pass by you — A bottle of wine. A carton of eggs. A cake from the local bakers. A tractor, of all things. A bunch of ballpens. A bag of flour.
In this video, join us as we show you how to make sense of this important economic indicator. You’ll learn how GDP is computed, and you’ll get answers to some pretty interesting questions along the way.
Questions like, “Why are the eggs in my homemade omelet part of the GDP, but the eggs my baker uses are not? Why does my bottle of French wine contribute to France’s GDP, even if I bought it in the United States?”
Most importantly, you’ll also learn why polar bears aren’t part of the GDP computation, even if they’re incredibly cute.
So, buckle in for a bit—in the following videos we’ll dive into specifics on GDP.
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Help us caption & translate this video!
We ca have FG prodused but NOT sold. This will go in STOCK. if we sell the stock next year=> will enter in GDP of next year? Me I would rather take in considrstion the specific cls VII account , than cash...
I have a question, why is the tractor considered a finished good when the wheat that the tractor harvested can be made into breakfast cereals, beers, vodka, and breads, so why is it considered a finished good?
we don't need money because we can make resources with nuclear
transmutation so we can make every element from nature in the
laboratory. we don't need energy from fossils because we can replace it
with nuclear fusion. so we dont need at all an economic sistem, we can
live simply by producing resources at home by transmutations , by create
food with stem cells, by replacing the savage sexual model of today
with genetic engineering thus replacing evolution by competition.
Let's say a bunch of houses are built, but are not sold until next year at highly inflated prices. Do we use houseprices in the year of completion to estimate their worth then, or count them next year when sold for the first time?
Do the goods have to be necessary sold to be counted in GDP, even without being sold the goods retain its MARKET VALUE right? So imagine a country produces lots of goods and never sells it, will that be counted in GDP, how does that go about? Anyone willing to clarify?
So China manufacturers iPhone for Apple Inc! So China is producing good! So the production of iPhone will be calculated in US GDP or China's GDP? Because iPhone belongs to Apple which is American Company but they're been produced in China. Please reply
Just recently Obama is taking credit for this most recent and wonderful GPD. Funny part is when he was POTUS, and the GDP was in the toilet, he told us that was the "new normal." And, it would have been if not for Trump. Just a fact devoid of emotion
Why should they not import polar bears, in their climate perspective, because the costs are higher than the benefits, especially if it goes beyond human GDP before the actual costs are calculated, look at the importance of inflatable mathematics', tax sent back to the stern, gaining interest's but not taxed on the paid-load, crooked really
Firstly, i wanna thank u for explaining these concepts in a very simplest manner...!!! Now my question is with respect to finished good and intermediate goods..... As you have mentioned if a bakery buys eggs it will not be counted, but if a consumer buys it, it will be counted, so how does the supermarket come to know purpose of buying or i would say how would they come to know if its for commercial use or domestic?
Through store channel i guess, if a retail store is selling than most likely it is for end consumer But if a distributor( distributor are not manufacture) is selling that it will be mostly likely to retailer like super or hyper markets and so on. In Bakery owner product will be on deliverable or reselling. As long as complete Product is delivered to consumer it will be considered. this is my assumption only. so GDP data is collected from 2 points 1 Manufacture 2. point of sales.
Value added approach. It takes into account the difference in values of products before and after an operation/production. The good may not be 'finished', but the counting done after that period is only based on the value added after that 'unfinished' product.
i think so....coz he said things that are made within a country and sold to another country.....
so Product A is made in China and is sold at 100Dollars to Belgium, then that 100 Dollars will be part of China's GDP
do we include sale of animals like horses, camels or say cattle in gdp? Also, if I'm constructing a house for my own use, then at what stage do I include it in Gdp? I was even wondering if plants, trees (bamboo, sandalwood, flowering plants) are included in Gdp?
Is it true that, lets say a huge wave wipes out a large part of a country and the other half goes full out rebuilding it. Would that make the GDP rocket up even if the counrtry is in a worse state then before the wave?
If so is the GDP really a good measure of how good a country is doing?
If half of the country gets wiped out, then the productive capacity would also drop by half. So even if the country goes full out rebuilding, there's no way the GDP can be higher than before, since the productive capacity has fallen.
But yes you're right, the GDP in this case would be overestimating the standard of living, since most of the GDP is going towards rebuilding the country, rather than producing consumer goods that raise standards of living.
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