Ch. 7 Reading Guide

Due Tues:
Read 112-117
1.  In your own words (and not the definition from class), what does GDP measure?
2.  Why do we only count final goods?  What would be an example of an intermediate good and why would it be excluded?
3.  What are "inventories" and how do they count towards GDP?
4.  Identify all other types of transactions that would be excluded from GDP.  Try to provide an example and explanation as to why national income accounts keep it out of out of GDP.
5.  How can the net exports component of GDP be negative?