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1

Well first of all the story why we only record final consumption is not completely straight - it’s not because we only care about activity of “real person” or consumer. But because counting it all the way would mean we double count the value of the good. For example imagine the following situation. A wood is produced and sold for 15\$ to furniture company ...


2

In your comment you say you want the answer in context of the classic textbook model for goods market/output equilibrium. Following the Blanchard macroeconomics textbook lets consider closed economy so the output will be given by: $$Y=C+I+G$$ where $Y$ is output/income (they must be always equal), $C$ consumption, $I$ investment and $G$ gov. spending. ...


1

Two possible explanations I have: The stock market capitalization to GDP in India, although high, is at around 70–80 percent, compared to 100+ percent for countries with more developed capital market. This means that any gains or losses in the stock market would have an average 70% impact on the economy. Being one of the fastest growing markets in the world ...


0

The right (and shorter) name for " income of our citizens/corporations abroad" is "the national FFI", where FFI stands for Foreign Factor Income. I will use this name. The second interpretation is correct, it will lead to correct calculation of the national FFI. If our corporation/citizen gets income from a factory that they own, but said factory is located ...


1

Friend, To find non-profit organizations (non-government) expenditures within the national accounts for GDP you can visit the BEA site (www.bea.gov) and go to the national accounts table 1.13. non-profit organizations is listed as Nonprofit institutions serving households (line # 49). To attempt to answer your question it would fall between firms and ...


0

If you assume, as you have, that nothing is produced domestically, GDP, which stands for "gross domestic product" would be zero. There is no economic activity, so there's no production, and GDP for that year would be zero. One could argue, of course, that there's value added involved in transportation, etc., but I think that's not what you're after. To be ...


0

GDP would not be zero in endowment economy in general. There are still prices and also interest rates, savings and investment in endowment economy. First, lets ignore other countries because foreign aid complicates GDP calculations (as Art pointed out if the endowment is foreign aid GDP would be zero). So lets suppose there is only one country, lets call it ...


1

Your conclusion would be correct in pure endowment economy where there is no production $Y(L) =0$ (assuming only labor as factor of production) and everyone has the same endowments. In an endowment economy where there is no production and GDP is just dropped on both home and foreign country trade is indeed a zero sum game as $M$ subtracts from your endowment ...


0

Both of your conclusions are correct. For #2, however, your example might have left something out. Consider a country that could not produce wine. By banning imports of wine, the country's net export would increase (a decrease in imports). However, this will also mean a reduction in consumption of wine as well. In fact, the increase in net exports of wine ...


0

Seems like I got incorrect information about how to calculate NFFI. I was told by a worker of the BEA that NFFI would be calculated as NFFI=FH-CA. In this case everything is okay.


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So, if I correctly understand what I learned in comments, this question is resolved by two things: 1.We add deprecation in order to ignore it, rather than take it into account. It makes sense because incomes are already decreased by amount of deprecation, so in order to "unaccount" deprecation we must add deprecation. And due to us ignoring deprecation it ...


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