Why should imports be excluded from gross domestic product? How is a purchase of an import recorded in the components of GDP?
What will be an ideal response?
Imports are purchases by domestic buyers of goods and services produced abroad and gross domestic product is a measure of domestic production of goods and services. Any purchase of an import is included as a positive in consumption, and then subtracted out of GDP by recording it also as an import.
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The marginal benefit is the
A) additional gain from one more unit of an activity. B) additional cost from one more unit of an activity. C) loss of the highest-valued alternative. D) additional gain from one more unit of an activity minus the additional cost from one more unit of the activity.
In order to achieve the maximum gains from trade, people should specialize according to
A) property rights. B) PPF. C) absolute advantage. D) comparative advantage.