Calculating the value of an economy is more complex than just adding up the value of every single thing that is produced because that would lead to:
A) overcounting, as the value of intermediate products would be counted twice.
B) overcounting, as there is a mark-up in everything that is sold.
C) undercounting, as most goods are not sold in retail markets.
D) undercounting, as only observable markets can be recorded.

Question

Quizplus · Accepted Answer

Intermediate products are goods or services that are used in the production of other goods or services. If their value is counted when calculating the overall value of the economy, it would be counted twice - once when they are sold and then again when the final product they contribute to is sold. This would result in overcounting. Therefore, to avoid overcounting, only the value of final goods and services should be counted.

Calculating the Value of an Economy Is More Complex Than