Question

Why do you think excluding the impact of imported goods and services consumed by consumers within the United States is a better measure of GDP than if those purchases were included?

Answer 1

The value of imported goods and services is not added into the GDP because these goods and services are not produced within the national territories. GDP includes the final value of only those goods and services which are produced within the country. Including imports will not give a true picture of the GDP and it will continue to be influenced by foreign production. When measuring the value of domestic production, only those goods and services are included that have been produced domestically. Also note that GDP measures the domestic production and not domestic consumption. Hence, imports, which are a part of domestic consumption but not domestic production, are excluded.