Flow of Product Approach

Each year the public ,consumes’ a wide variety of final goods and services: goods such as,apples, computer software, and blue jeans; services such as health care and haircuts. We include only final good goods ultimately bought and used by consumers. Households spend their incomes for these consumer goods. as is shown in the.
upper loop of Figure 21-1. Add together all the consumption dollars spent on these final goods, and you
will arrive at this simplified economy’s total GDP.

National accountants Use market prices as weights in valuing different commodities because market prices reflect the relative economic value of diverse goods and services. That is, the relative prices of different goods reflect how much consumers value their last (or marginal) units of consumption of these goods.

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