asked 122k views
2 votes
True or False. If intermediate goods were counted as a part of GDP, the value of these goods would be counted twice.

1 Answer

6 votes

Final answer:

Intermediate goods are excluded from GDP calculations to avoid double counting and prevent overestimation of the economy's size.

Step-by-step explanation:

To avoid double counting and prevent an overestimation of the economy's size, intermediate goods, which are goods used in the production of other goods, are excluded from GDP calculations. Only the value of final goods and services, which are goods at the furthest stage of production that are sold for consumption, investment, government, and trade purposes, are included in GDP. For example, in the scenario given, only the value of the Ford truck would be counted in GDP, not the value of the tires that go into producing the truck. Therefore, the statement is true; if intermediate goods were counted as part of GDP, their value would be counted twice.

answered
User Jhondge
by
7.9k points

No related questions found

Welcome to Qamnty — a place to ask, share, and grow together. Join our community and get real answers from real people.