Question

Why are intermediate products excluded from macroeconomic calculations of GDP?

a

because those products are goods, not services

b

because their value is included in that of the final product

c

​because the GDP is a measure of market output on a national level

d

because the GDP is a measure of market output on a local level

Answer 1

b) because their value is included in that of the final product

Explanation:

Intermediate products are excluded from macroeconomic calculations of GDP because their value is already accounted for in the final product. Including the value of intermediate products would result in double counting, as the value of those products is already captured when the final product is calculated. GDP (Gross Domestic Product) is a measure of the total market value of all final goods and services produced within a country's borders during a specific period.

Answer 2

Answer: The correct answer is b: because their value is included in that of the final product.

Step-by-step explanation:

Intermediate products, also known as intermediate goods, are goods that are used as inputs in the production process to create final goods or services. These intermediate products do not directly contribute to the final output that is purchased by consumers.

To avoid double-counting the value of these intermediate products, they are excluded from macroeconomic calculations of GDP (Gross Domestic Product). Including their value would lead to an overestimation of the total output of an economy. By including only the value of final products, GDP accurately represents the market value of goods and services produced for consumption or investment.