In computing GDP, it is essential to

Question

Quizplus · Accepted Answer

Double counting occurs when a good or service is counted more than once in the process of calculating GDP, leading to an inflated figure. To avoid this, only the final value of a good or service is counted in GDP. Including government tax revenues and transfer payments would not be appropriate since they do not represent the production of goods or services. Counting intermediate products directly would also lead to double counting, as the same product may be used in multiple stages of production leading to multiple counts.

In Computing GDP, It Is Essential to