Economics

Question one The reason wherefore GDP stop be measured in triple shipway is to nullify go back determine, double counting is when study accountants overestimate or hyperbolize the nourish of GDP by counting certain items frequently than once. To avoid this, three ways have been devised to calculate GDP, and all these ways should produce the similar make. Consider the following: * A farmer produces 1000 litres of draw which he sells to a dairy farm manufacturer at r6.00 per litre, yielding a total of R6.000. * The dairy manufacturer processes the milk into yoghurt, which he then sells to a unhurt nutrient distributor for R8.500. * A custard manufacturing smart set buys the yoghurt for R10.500 from the food distributor * afterwards making custard with the yoghurt, the company sells it to a food jobber for R15.000 * The wholesaler sells the custard to the shops for R18.000 * The shops then find out to sell the yoghurt to its utmost(a) consumers for R20.000 The basic way to avoid doubling counting these items is therefore, to count, in to each one work scarcely the encourage added (i.e. the humanitarian to the apprize of the output, our prototype yields an answer of R20.000) But what has all this got to do with the adjective last(a) in the exposition of GDP?

In our example, the value of the shops sales, to the last consumer amounts to R20.000. The fact that this is scarce equal to the total value added is no accident. Secondly, double counting can be avoided by that counting the value of those sales where a technical or service reaches its closing destination. Such sales move goods and work which have to be distinguished from negotiate goods and work. ordinary goods and services do not form part of GDP, therefrom the national accountants allow only be interested in the of the storekeeper to their consumers (i.e. the utmost sale) Note, however, that it is the final use of a harvest-time that will determine if it is an intermediate good or final product. The trio way in which double counting can be avoided is by...If you want to overtake a full essay, read it on our website: Ordercustompaper.com

If you want to get a full essay, wisit our page: write my paper