Mention if the given statement is true or false:

Adding the value of intermediate goods is a must in calculating the GDP of a nation.

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True

False

answer is B.

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Detailed Solution

The given statement is false.
The Gross Domestic Product, or GDP, is the final value of all goods and services produced in a country in a financial year. Adding the value of intermediate goods is not a must in calculating GDP. If the value of intermediate goods is included, it will lead to double counting. Intermediate goods are those goods that add value to the final product. Let us take the example of a cloth producer who sells a piece of cloth for Rs 50. He would use threads worth Rs 10 and cotton worth Rs 15, which act as intermediate goods. However, he will be including these values in the final price of Rs 50. So, it is unnecessary to add Rs 10 and Rs 15 again.
Thus, the correct statement is that the value of intermediate goods is not included in a nation's GDP.

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