Question

Why Is It Important to Distinguish Between Final and Intermediate Goods?

Answer 1

It is important to distinguish between final and intermediate goods because at the time of calculation of GDP we add only the value of final goods which includes the value of intermediate goods.

If the value of intermediate goods are again added separately then it will inflate the GDP which will produce an incorrect result.

Also read:

• Difference Between Final Goods and Intermediate Goods
• Final Goods
• Intermediate Goods
• GDP Formula
• Nominal and Real GDP