ECONOMICS
GDP
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
|
|
Because you would end up counting the same thing twice
|
|
|
Because intermediate goods are thrown away
|
|
|
Because intermediate goods exist only in theory
|
|
|
Because intermediate goods are final goods
|
Detailed explanation-1: -Intermediate goods are not included in the calculation of a country’s GDP. The reason for not including them in the GDP is because it will lead to counting the value of the goods twice, and the norm is to count the price of final goods only once.
Detailed explanation-2: -To avoid double-counting, GDP is based on the “value added” principle and, therefore, leaves out the value of goods and services which are used in the production of other products. GDP also does not include the value created by households.
Detailed explanation-3: -Intermediate goods, which are goods that go into the production of other goods, are excluded from GDP calculations. This means that in the example above, only the value of the truck would be counted.
Detailed explanation-4: -Only final products and services are accounted for since a firm has to stay away from numerous counts. The costs take care of the expense of every single transitional phase when producing the product or item and services that were utilized to create the final yield.
Detailed explanation-5: -The steel that is used to produce cars which are sold at the dealership is also an intermediate good. Because they are not final goods, they’re not counted in the GDP of a nation.