GK
INDIAN ECONOMY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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values of goods and services in production
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final goods and services
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adding up the actual numbers of goods
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goods and services in the three sectors
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Detailed explanation-1: -(ii) Not every good (or service), that is produced and sold, needs to be counted. It makes sense only to include final goods and services. Eg: A farmer sells wheat to a flour mill for ‘ 8 per kg.
Detailed explanation-2: -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-3: -The value of final goods and services produced in each sector during a particular year provides the total production of the sector for that year. And the sum of production in the three sectors gives what is called the Gross Domestic Product (GDP) of a country.
Detailed explanation-4: -Assertion (A): Not every good or service that is produced and sold needs to be counted to know the total production in each sector. Reason (R): The value of final goods already includes the value of all the intermediate goods.