52
votes
Is money we make completely taken away by taxes?
No, this will not happen.
Government does not tax people just for 'shits and giggles'. Governments do not hoard money at some pile as a some sort of dragon from a fantasy novel. Taxes are levied so ...
- 54.4k
20
votes
Why do we need to "get the economy moving again"?
Both Alice and Kate have bills to pay, regardless of whether they are earning money or not. Restaurants and salons have to pay rent and maintenance on their properties whether they are in business or ...
- 301
19
votes
Accepted
Why are imports subtracted from GDP?
When we import something, we consume it. So when calculating consumption we are bound to count import as a positive component of GDP. Since it is not (we did not produce imports domestically), we ...
- 1,661
19
votes
Is money we make completely taken away by taxes?
Wind the clock back in the other direction: where did this money come from in the first place? The government issued it. Render unto Caesar that which is Caesar's, etc.
You've also chosen to stop your ...
- 558
13
votes
Accepted
What Level of Government Debt to GDP Ratio is Sustainable?
As you have pointed out: where it comes from is very important. As to the Japanese situation it is quiet different from the US position from example. In fact most of the Japanese debt is owned by ...
- 583
13
votes
Why do we need to "get the economy moving again"?
Trade is good because it creates efficiency. Alice has invested in her kitchen and knows the supply chain of ingredients, and due to the efficiency of her business, she can sell a meal for $50. If ...
- 718
12
votes
Why do some news say China’s economy is bad yet still predicting its 2023 growth to be around 5 per cent?
The only time I read the word bad in the linked news article is refering to
The government has set a modest GDP growth target of around 5% for
this year after badly missing its 2022 goal.
The ...
- 4,008
10
votes
Accepted
Is investment in real estate a real investment?
Purchasing new homes would count as an investment. According to Blanchard et al. Macroeconomics: a European Perspective pp 568 in glossary investment is defined:
Investment (I): Purchases of new ...
- 54.4k
9
votes
Why did the Federal Reserve change the data about USA GDP?
This happens all the time and is normal. It's due to measurement error. It is hard to measure these things in real time and as time goes by more data comes in, which allows measurement of GDP and ...
- 6,128
9
votes
What Level of Government Debt to GDP Ratio is Sustainable?
I don't think you can sensibly discuss this without including two additional factors:
what is the prevailing interest rate?
is the debt in local or foreign currency?
The first affects the cost of ...
- 558
9
votes
Is money we make completely taken away by taxes?
Your calculation is fundamentally wrong because you are forgetting an important factor - the money that government spends.
In your calculation you seem to think that the 10% the government takes in ...
- 218
8
votes
Accepted
Is economic growth measured in real GDP or in real GDP per capita?
Usually GDP growth rates are publicly talked about in real terms but not per capita, see for example World Bank where, above the relevant table we read
Annual percentage growth rate of GDP at ...
- 33.4k
8
votes
Why are imports subtracted from GDP?
One way to navigate rather safely in National Accounting Identities, is to put on the one side "what you have available" and on the other side "what you do with it". In the specific case ($M$ being ...
- 33.4k
8
votes
Can a closed economy flourish?
It depends on what you mean by "sustained growth" and "flourishing markets".
Clearly the Earth as a whole is a big market. If you do not look at human made borders: the global economy is currently ...
- 28.6k
8
votes
Why do we need to "get the economy moving again"?
Let's consider another example. I'm an automotive manufacturing service engineer; I build and repair machines that are used to build and repair cars. I use the money I earn to buy a variety of things, ...
- 193
8
votes
Accepted
Why does the inflation not follow the money supply?
This is because classical economic theory absolutely does not say that:
inflation occurs when the money supply is increased faster than the economic growth.
Even in most basic 101 models inflation ...
- 54.4k
7
votes
Why do we change the base year?
The change in base year keeps the dollar values meaningful to contemporary readers. If we still used, say, 1900 as the base year for US GDP, the dollar values for today would be so tiny they would ...
- 170
7
votes
Accepted
How is the GDP growing when nothing else seems to be?
There's a bit to unpack here.
Consistent wage growth seems in line with rising GDP. So does a steadily falling unemployment rate.
For other economic measures, the stock market is a whole other ...
- 6,578
7
votes
Why do we need to "get the economy moving again"?
Most people aren't Alice and Kate.
GDP is a measure of the total goods and services produced within an economy. The point is measuring total production, not measuring how much money is changing hands....
- 430
6
votes
Accepted
Why is machine built this year but not sold this year included in GDP?
The comment provided by @Kitsune Cavalry:
It counts as investment. Inventory, capital, and structures are part of investment. Unsold stuff counts as inventory.
is correct as to the accounting; let ...
- 6,374
6
votes
Accepted
Is there an alternative metric to GDP that measures a country's assets rather than flows?
You are correct in pointing out the flaws of GDP. But honestly, it's the best we have came up with; measuring the stock of wealth is just impossible.
You say you can estimate the value of your own ...
- 374
6
votes
Why are "transfer payments" not part of GDP?
Transfer payments aren't included in GDP to prevent double-counting.
The reason the author's question is troubling you is because the answer externalizes everything that happens after the payment ...
- 196
6
votes
Accepted
How can I best estimate a company's contribution to GDP?
As a comment noted, value-added is the way to go. And how do we measure value added at the level of an individual firm?
It is
$$\text{Value-added} = \text{Wages and Salaries incl. Insurance}+\text{...
- 33.4k
6
votes
Accepted
How would gross world product look like if fossil fuel is treated as capital and not as income?
There is a large literature considering the depletion of natural resources, including fossil fuels, in relation to GDP. Some writers explicitly refer to such resources as a kind of natural capital. ...
- 8,311
6
votes
Accepted
Can an unprofitable company increase GDP?
You are correct in suspecting that this firm produces no added value, but this does not contradict your definitions.
We sum up the cost of salaries and retained earnings of all firms in the economy
[...
- 28.6k
6
votes
GDP doesn't add up in FED data - why?
It is because you are using wrong data, in fact the two series you plot never overlap save for some crossing points, and given you are using wrong datasets its actually weird why they follow each ...
- 54.4k
6
votes
Is money we make completely taken away by taxes?
A distinction must be made, as also other answers suggest, between money and income.
If you speak of money, meaning the amount of money you have at some instant of time, and with which you pay taxes ...
- 3,312
5
votes
Accepted
Why did the Federal Reserve change the data about USA GDP?
@BB King's answer is good, but I want to make one point very clear:
The Fed did not change the data.
The Bureau of Economic Analysis revised the data as a part of its 2013 comprehensive revision ...
- 6,374
Only top scored, non community-wiki answers of a minimum length are eligible