MACROECONOMICS: WHAT IS IT ABOUT?
7
GDP
is the total value of the current production of final goods and ser-
vices within the national territory during a given period of time—a quarter or
a year. This definition implies that measuring output is an exercise fraught
with difficulties. For instance, the fact that GDP includes only current produc-
tion means that we do not count the resale of items. Similarly, since only final
goods are included means that we do not count raw materials and the interme-
diate goods used as inputs. Let us take an illustration.
Suppose a farmer produces INR 50 worth of wheat which is then sold to a
baker. ...
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