Question

U.S. car dealers sell both used cars and new cars each year. However, only the sales of the new cars count toward GDP. Why does the sale of used cars not count

Answer 1

Answer:

It will be double counting

Explanation:

GDP or gross domestic product is the measure of the total value of productions in the economy per period. In calculating the GDP, economists consider only finished products produced within the borders of a country in a financial year.

Second-hand cars cannot be counted in the calculation of GDP because it will result in double counting. GDP is calculated using the income, expenditure, or production approach.  The second-hand cars were accounted for when they were purchased or sold for the first time. If the production method was used, the vehicles were accounted for in the year they were manufactured.