00:01
Let's start by making sure we know what gdp is, right? we define gdp as the market value of all final goods, services, produced domestically, right? that's what gross domestic product is.
00:22
The key word here is going to be final, right? final refers to this idea that no intermediate goods, right? we are thinking about only goods that are going to their end stage, that are reaching the consumer.
00:40
Because we're thinking about, again, what is produced.
00:45
This is not a, it's a measure of how much stuff was actually made, right? so we have now a used car.
00:55
And used cars are bought and sold, but they're not.
00:58
Produced, right? it's the used car was counted in gdp when it was new, right? the new car entered gdp because it rolled out of the factory and then it ended up as a final good or service, right? it was handed to over to the consumer and they started driving it.
01:22
But the used car for used, right, nothing is produced.
01:30
If you see, use goods or services, the value of those goods and services does not enter gdp, right? does not enter gdp, right? it is the idea that this, you know, imagine that we have a used car and you sell it to me and then i buy it back from you and you sell it to me again and we just hand money back and forth.
01:58
If that counts as gdp, we could increase gdp an infinite amount even though nothing would be produced, right? giving each, right, we just swap ownership of the car back and forth, selling it back and forth for each other.
02:10
We keep stacking up these transactions, but nothing was produced.
02:13
The new car was the final good that was delivered to the consumer.
02:18
Once the final good is delivered to the consumer, that's it.
02:20
That thing is part of gdp.
02:21
It is off the gdp books.
02:23
So anything that involves the used car here is going to be wrong, right? the used car value does not enter gdp.
02:36
But we have another suggestion here...
