Investopedia states that

Gross domestic product (GDP) is the total monetary or market value of all the finished goods and services produced within a country's borders in a specific time period.

But how does GDP be calculated? Some articles explained that GDP is being calculated and measured:The monetary value of final goods and services. I understand that, but won't the value of the product be double - calculated ? What is actually the final (for the example below, for both the manufacturer and shipping company, the product/shipping service could all be considered as final

For example, I buy a Mac book. The Mac book is being produced in China and Apple company pay manufacturer a certain amount of money for manufacture that. Then, the product is shipped from China to other countries to sell. And I finally pay a larger amount of money to get the Mac from apple.

I just wonder will only the money I paid (the final goods) be contributed to GDP or the money apple pay to manufacture be also counted and shipping price be counted as well?

Could anyone explain me how it being measured?

Thanks for any responds

*I checked these two questions: What is the Gross Domestic Product (GDP)? and What is the Gross Domestic Product (GDP)?, but doesn't solve my confusion.


1 Answer 1


Final goods and services expenditure means it’s sold to the final consumer. Business to business transactions are not final.

To be more specific as explained by CBS (Dutch statistical office - but GDP is standardized around the world so it’s valid source) here:

Expenditure on goods or services that are used for the direct satisfaction of individual or collective needs. Expenses may be made at home or abroad, but they are always made by resident institutional units

Consequently there isn’t any double counting.

  • $\begingroup$ Thank you for the answer! So only when products sell from business to us (consumers) it will counted, but what about overseas? A production made in oversea company and sell in native country. Will it only contribute to the native country? It seems not make sense???? $\endgroup$
    – James
    Feb 13, 2022 at 20:27
  • $\begingroup$ @James I am bit confused by your phrasing, which country is native the home country or something that is produced abroad in itself (itself being native country)? $\endgroup$
    – 1muflon1
    Feb 13, 2022 at 20:36
  • $\begingroup$ Like the example in my question, the macbook produced in china, but ship and sell in canada. Based on your answer, the selling of macbook will only contribute to canada GDP since it final consumer is in Canada, it is right? But how does this make sense??? $\endgroup$
    – James
    Feb 13, 2022 at 20:44
  • 1
    $\begingroup$ @James no it won’t it will contribute to Chinese GDP - it will be counted in Canada but as import the GDP equation is GDP= C+I+G +X -M where C,I and G are various types of spending X is export and M is import as you can see imports are subtracted from GDP. The point of the text above is that only final transactions are recorded. $\endgroup$
    – 1muflon1
    Feb 13, 2022 at 20:55
  • $\begingroup$ Thank you for the explanation! $\endgroup$
    – James
    Feb 13, 2022 at 20:58

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