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GDP

Why is the va...

Question

Why is the value of intermediate goods not included to calculate GDP?

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Solution

It will become a hectic process to calculate the value and add it at each stage of the production and consumption ,to save time ,cost and energy the GDP takes the value of the all final goods and services on which the intermediate cost is already added.

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Q. GDP calculation includes the value of resold goods

Q. Antima, an economist, was calculating a nation's GDP for 2020-21. She erroneously included the prices of intermediate and final goods in her calculation. Determine the economic impact of this situation.

Q. State with reasons whether you agree or disagree with the following statements:

The money value of intermediate goods is not included in the estimation of national income.

Q. State whether the following statements are true or false.

1) National income is computed every year.
2) Inclusion of value of intermediate goods leads to double counting.
3) GDP includes net income from abroad.
4) Financial year in India is leap year.
5) Services of housewives are included in national income.

Q. Two statements are given in the question below as Assertion (A) and Reason (R).

Read the statements, and choose the appropriate option.

Assertion (A): Not every goods and service produced in the economy must be counted to calculate the Gross Domestic Product.
Reason (R): The value of intermediate goods and services will be reflected in the value of the final goods and services.

[0.8 marks]

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