Choose whether the statement is true/false:

The value of intermediate goods is not taken in the calculation of GDP.

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True

False

answer is A.

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Detailed Solution

The above statement is true.
The value of intermediate goods is not taken in the calculation of GDP.
While calculating the Gross Domestic Product of an economy, the value of intermediate goods is not considered. GDP or Gross Domestic Product refers to the final value of goods and services produced in an economy in a financial year. Intermediate goods are those goods that help in the production of the last good. Let us take an example of a biscuit factory which sells a packet of biscuits at Rs. 25. The intermediate goods used in producing a pack of biscuits would be flour and sugar, which cost Rs 5 and Rs 6 each. While calculating GDP, only Rs 25 is considered since it already contains the value of flour and sugar. So there is no need to add them separately.

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