To calculate GDP using the value-added method,one would add up
A)the market value of final goods and services produced during a particular period.
B)only the value added by the underground economy.
C)the value added by each firm involved in the production of final goods and services.
D)the market value of intermediate goods and services produced during a particular period.

Question

Quizplus · Accepted Answer

The value-added method involves calculating GDP by adding up the value added by each firm involved in the production of final goods and services. This approach avoids double-counting by only including the value added at each stage of production. Therefore, only choice C, which refers to the value added by each firm, is the correct answer. Choices A and D are incorrect because they either include the market value of intermediate goods or only focus on final goods, whereas the value-added method already accounts for intermediate goods. Choice B, which only includes the underground economy, is also incorrect as it overlooks legal economic activities.

To Calculate GDP Using the Value-Added Method,one Would Add Up