GDP measures the final value of goods and services produced to avoid the problem of
A) disintermediation.
B) double counting.
C) production by foreign citizens working in the United States.
D) undervaluing output.

Question

Quizplus · Accepted Answer

GDP measures the final value of goods and services produced in a country's borders in a given period, so it is important to avoid double counting. Double counting occurs when the value of intermediate inputs, which are used to produce a final good or service, are included in the GDP calculation along with the final good or service itself. By measuring only the final value, GDP avoids overestimating the value of production in an economy.

GDP Measures the Final Value of Goods and Services Produced