What’s Counted in GDP What’s Not Counted
1. Final Goods- goods for personal 1. Intermediate goods- goods that are
consumption or a final good for a business- going to be resold or processed further.
like machine Ex: Ford buys tires from GoodYear- tires
are not counted because the cost of the tires
will show up on the price of the car.
2. Current year stuff 2. Previous Year- someone buys a 2005
car in 2009- not counted as an expenditure
because the car was counted the year it was
3. Market transaction- ex: I pay Jimmy to 3. “Do it yourself” projects- I mow my
mow my yard yard- not counted, though productive
4. Made in the USA, whether by a foreign 4. Imports
company or not
5. Financial Transactions- purchase of
stocks & bonds are not counted because
those purchases do not measure any
6. Transfer payments- payments made by
the government or by people to folks in
exchange for no productivity- (not a very
good definition, but examples are welfare
payments made by the government or
Granny gives you $100 for your birthday)
7. Illegal Activities- murder for hire
schemes are productive but not counted
because they are illegal- all “black market”
deals do not get counted (drugs,
1. We count only the final retail price of a new good or service in GDP. Why”
2. A purely financial transaction will not be counted. Why?
3. Why doesn’t a homeowner’s home improvement work get counted?