Question

The intermediate goods are not counted in the calculation of GDP, because: * 2 points A. that involves double-counting. B. these goods are not produced for the market. C. these are produced in the underground economy. D. these goods involve financial transactions. E. these goods were not produced in the current year.

Answer 1

Answer:

A. that involves double-counting.

Explanation:

Imagine a company that produces furniture. If we would include the wood, the nails, the wood paint, etc., were included in the calculation plus the furniture itself, you would be double-counting the cost of the manufactured furniture. If you consider waste materials, then you would be adding even more costs. That is why you only consider finished goods.