Choose whether the statement is true/false:

The value of every good and service produced in the economy is added to obtain the value of GDP.

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True

False

answer is B.

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Detailed Solution

The above statement is false.
GDP, or Gross Domestic Product, refers to the final value of goods and services produced in an economy over time. By final goods, what is meant is that the value of intermediate goods is not considered. Let us take the example of a biscuit-making factory that uses raw materials like flour, sugar, etc. Flour might cost Rs. 10, and sugar might cost Rs.5. Let the value of the final biscuit be Rs. 25. It means that the absolute value of a biscuit includes the value of flour and sugar. So, there is no need to add it again, as it will lead to double counting. Hence the correct statement would be that every good and service produced in the economy is not added to obtain the value of GDP.

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