Question

Explain the term GDP. Why are only „final goods and services‟ counted in GDP ?

Answer 1

GDP stands for gross domestic product. It is the sum total of all final goods and services produced in a country during a particular year.

• Intermediate goods are used up in producing final goods and services. The finished good made up of all the intermediate goods are the final products..
• The value of final goods is only used in the calculation of the GDP because it already includes the value of all
  the intermediate goods that are used in making the final good.