Why doesn't GDP include intermediate goods?
A) Intermediate goods are not sold to consumers.
B) Intermediate goods are never valued at full retail price, leading to an undervaluation of GDP.
C) The value of intermediate goods is included in the final product, and accounting for the value twice would overestimate GDP.
D) All of these are reasons why GDP does not include intermediate goods.

Question

Quizplus · Accepted Answer

Including the value of intermediate goods in GDP would result in double counting, as their value is already included in the final product. Therefore, the value of the intermediate goods is already accounted for in the calculation of GDP through the value of the final good or service produced. Option A is true, but not the main reason why intermediate goods are excluded from GDP. Option B is incorrect as the value of intermediate goods is already included in the final product at production, and therefore, they do not need to be valued at full retail price. Option D is incorrect, as only option C is the primary reason why intermediate goods are excluded from GDP.

Why Doesn't GDP Include Intermediate Goods