Mistakenly adding the value of a good or service twice by counting the intermediate goods and services in GDP is known as:
A)value added.
B)double counting.
C)factor payments.
D)net depreciation.

Question

Mistakenly adding the value of a good or service twice by counting the intermediate goods and services in GDP is known as:
A)​value added.
B)​double counting.
C)​factor payments.
D)​net depreciation.

Quizplus · Accepted Answer

Double counting occurs when the value of a good or service is counted twice in the calculation of GDP, once as an intermediate good or service and again as a final good or service. This mistake inflates the GDP and leads to an inaccurate measure of the economy's production.

Mistakenly Adding the Value of a Good or Service Twice