The true magnitude of services in the economy is understated due to services performed by goods-oriented firms being counted as goods in the computation of Gross Domestic Product.

Question

Quizplus · Accepted Answer

Many goods-producing firms also provide services (such as maintenance, software updates, and customer support) that are integral to the use of their goods. However, these services are often bundled with the sale of goods and thus are counted as part of the goods' value in GDP calculations, leading to an understatement of the true magnitude of services in the economy.

The True Magnitude of Services in the Economy Is Understated