Are goods and services purchased to comply with regulations included in GDP?

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Question: 

Are goods and services purchased to comply with regulations included in GDP? For example, is money spent on preparing tax returns considered "production" in GDP calculations? It kind of feels like it should *not* be, but I suspect that it is.

Answer: 

GDP is the final $ value of all final goods and services produced in a year. Even if a service exists to help compliance with a regulation, it is included because the provision of that service, such as that performed by a tax attorney, is income to the provider. Viewed this way, it is immaterial why the service exists in the first place - to GDP calculations, a chef or a tax attorney or a travel agent are all the same; they are providing services.

Last updated on May 15, 2017