ForumIAS:Current Affairs & Newspaper Analysis 2018(Morning Batch)
Batch will be started on 23rd December Click here

Doubt - National Income Accounting

The Steel produced by the Steel Industry is an important part of Eight Core Industries. Naturally Steel production also constitutes a major share in Aaccounting our GDP. But, my doubt is whether the steel produced by the Steel industry be accounted for calculating GDP. How can it be a Final Good. Isn't Steel produced by the Industry an Intermediate Good?
Please help me clarify this. Not sure if I have gone wrong somewhere in understanding concept.

Why I asked ia because in Macroeconomics text, output of steel industry is taken as an example of final product, at page 10.
Thanks people

Comments

  • If I referring to the same passage that you have, steel has been listed as an intermediate good.
    "Examples are steel sheets used for making automobiles and copper used for making utensils. These are intermediate goods, ..."
    In any case, steel is definitely an intermediate good. It is even present in the wikipedia page for intermediate goods as an example.
  • edited May 2016
    Understand it through a example - jute and cotton is mostly used in textile industry so by your logic it should not be counted for calculating GDP. It dosen,t happens like that there is value addition at many level . Intermediate goods are calculated using the value added approach, which is accomplished by valuing each stage of production towards a final production.
    E.g- you buy a car ,after 2 months you want to sell it will it be counted in GDP - no it won,t but if you take the services of brokers then the amount you paid to him for her services will be counted. goods and services Don,t have to be final to get counted and there are no final goods either ,there,s always scope to add further value into it.
  • If dhaba wala buys aata its internediate good...but if u buy it its final good...
  • edited May 2016
    Okay thanks @HugorHill @abhi5445 @pranav_anant . i got it wrong by thinking that Steel is a final product.
  • One more doubt. It is said NNP at factor cost is National Income. But for all calculations we use GDP. What makes GDP not the right measure for beiny considered as National Income?
    If my question is factually wrong, please correct me fellows..
Sign In or Join to comment.

Courses by ForumIAS for CSE
ForumIAS is trusted by over 10,000+ students for their Prelims, Mains and Interview Preparation and we currently run several assistance programs to help students from Civil Services prelims preparation to rank upgradation to IAS. You can enroll for these programs by visiting http://blog.forumias.com/courses

Welcome!

We are a secret self-moderated community for Civil Services preparation. Feel free to join, start a discussion, answer a question or just to say Thank you.

Just dont spread the word ;)

Sign in or join with Facebook or Google

Subscribe to ForumIAS Blog