ECO100Y5 Lecture Notes - Lecture 9: Gdp Deflator, Gross Domestic Product
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Value added: the value of a firm"s output the value of the input that it purchases from other firms. This is done in order to avoid double counting. Multiple counting would actually be a better term because if we added up the values of all sales, the same output would be counted every time that it was sold by one firm to another. Intermediate goods: all output of some firms that are used as inputs by other firms. Final goods: goods that are not used as input by other firms but are produced to be sold for consumption, investment, government, or export during the period under consideration. If the firm"s sales could be easily disaggregated into sales of final goods and sales of intermediate goods, then measuring total out would be obtained by summing the value of all final goods produced by firms.