Why are only Only final goods and services included in the GDP ?

see full answer

Your Exam Success, Personally Taken Care Of

1:1 expert mentors customize learning to your strength and weaknesses – so you score higher in school , IIT JEE and NEET entrance exams.

An Intiative by Sri Chaitanya

Adding values of all goods and services would lead to multiple counting which is incorrect.

To ignore small numbers

To add only big values

None of these

answer is A.

(Unlock A.I Detailed Solution for FREE)

Best Courses for You

JEE

NEET

Foundation JEE

Foundation NEET

CBSE

Detailed Solution

Only final goods and services are included in the GDP because adding values of all goods and services would lead to multiple counting, which is incorrect.
Therefore, we do not include intermediate goods. For example, a farmer sold corn to the corn flour mill at 30 rs one kg. The corn flour mill owner grinds the corn, converts it into corn flour, and sells it at 60 rs to the corn flakes-making company. The corn flakes company converted the corn flour into corn flakes and sold it at 100 rs for one packet on the market to the consumer. Finally, corn flakes reached the consumer at Rs.100. Here, the intermediate goods are corn and corn flour, which are not to be taken into the GDP because corn flakes include corn and corn flour already.

Watch 3-min video & get full concept clarity