Select if the given statement is true/false:

The value of intermediate goods are added while calculating GDP.

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True

False

answer is B.

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Detailed Solution

The given statement is false.
Intermediate goods are semi-finished goods. While calculating GDP, the value of intermediate goods is not taken to avoid double counting. Instead, only the value of final goods is taken into consideration. GDP refers to the final value of goods and services produced in an economy in a financial year. For example, let us take an example of a biscuit producer who charges Rs 25 for a packet of biscuits. One packet of biscuits contains sugar and flour worth Rs 5 and Rs 10 each. However, while calculating the Gross Domestic Product, only Rs 25 is taken into consideration. There is no need to add Rs 5 and Rs 10 again.
The correct statement is that the value of intermediate goods is not added while calculating GDP.

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