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How Do Imports Affect GDP?



Gross domestic product (GDP) is the total market value, expressed in dollars, of all final goods and services produced in an economy in a given year. When compared with previous periods, GDP tells whether an economy is producing more output (expanding) or less output (contracting). As such, it is a useful measure of the health of the economy and among the most important and widely reported economic data. A variety of people, from business owners to policymakers, consider GDP when making decisions. Additionally, international trade is measured as part of GDP and is a large and growing component of our nation's economy. It's also an important, but controversial, political issue. However, the current textbook and classroom treatment of how international trade is measured as part of GDP can lead to misconceptions if not properly explained. This essay intends to correct misconceptions and provide clear instruction.

Suggested Citation

  • Scott A. Wolla, 2018. "How Do Imports Affect GDP?," Page One Economics Newsletter, Federal Reserve Bank of St. Louis, pages 1-6, September.
  • Handle: RePEc:fip:fedlpo:00037

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    Cited by:

    1. Alexander I. VILLANUEVA, 2020. "Analyzing Romania GDP: Final consumption, gross investment, and net exports influence compared to previously published models," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(4(625), W), pages 169-176, Winter.
    2. Alexander I. VILLANUEVA, 2021. "Pre- and post- analysis of Bank of Japan’s policy implementation of negative interest rates," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(1(626), S), pages 43-60, Spring.

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