To avoid double counting in the calculation of GDP, which types of goods are typically excluded from the calculation?

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Question restatement: To avoid double counting in the calculation of GDP, which types of goods are typically excluded from the calculation?

Option 1: intermediate goods
- Why this is treated as the correct option in the provided answer: In GDP accounting, the goal is to sum final output to avoid counting the same value more than once. Intermediate goods are components used to produce final goods and services, so they are not counted separately in the final GDP figure; instead, the value they contribute is captured in the value of the final product. This is the classic double-counting avoidance principle.

Option 2: capital goods
- Why this is incorrect: Capital goods (like factories, machinery) are considered investments that contribute to production over time. They are included in GDP as gross domestic investment. They are not excluded to prevent double counting; rather, they are part of the expenditure/investment side of GDP growth.

Option 3: inventory goods
- Why this is incorrect: Changes in inventories are included in GDP as part of gross private domestic investment. They reflect goods produced but not yet sold, so excluding them would misstate current production. They are not excluded to avoid double counting; they are incorporated to measure investment in inventory.

Option 4: nonmarket goods
- Why this is incorrect: Nonmarket goods (like household chores, informal bartering, or unpaid work) are generally not captured in official GDP because they are not traded in markets with observable prices. While true, this exclusion is not the specific mechanism for avoiding double counting in GDP accounting. The question focuses on double counting among market transactions, where intermediate goods are the primary concern.

Option 5: value-added goods
- Why this is incorrect: The term "value-added goods" is not a standard category used to describe a type of good to be excluded for double counting. GDP calculations rely on the value added at each production stage, but the phrase here does not indicate a category that would be excluded; rather, value added is the method used to aggregate outputs without double counting.

Summary cross-check: The textbook rationale for excluding certain goods centers on ensuring each component of production is counted exactly once. Among the options, intermediate goods are the canonical example that would be excluded from the final GDP sum to prevent double counting, while the other categories either are included (capital and inventory) or refer to omissions for other reasons (nonmarket goods, and the ambiguous value-added term).

ECON3020W04 ECON Quiz 1- Requires Respondus LockDown Browser

To avoid double counting in the calculation of GDP, which types of goods are typically excluded from the calculation?

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Similar Questions

Using the following information calculate the GDP for this economy: Consumption of $5 000 Investment of $10 000 Government purchases of $3 000 Government transfer payments of $1 000 Exports of $6 000 Imports of $5 000

If consumption is $4000, exports are $300, government purchases are $1000, imports are $400, and investment is $800, then GDP is $5700.

If this economy has 1,200 workers in total, what is total GDP at time t, i.e., what is 𝑌 𝑡 ? Round your answer to the nearest integer. Hint: Take advantage of the fact that 𝐾 𝑡 = 𝑘 𝑡 × 𝐿 𝑡 and/or 𝑌 𝑡 = 𝑦 𝑡 × 𝐿 𝑡 .

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ECON*3020*W04 ECON Quiz 1- Requires Respondus LockDown Browser

To avoid double counting in the calculation of GDP, which types of goods are typically excluded from the calculation?

View Explanation

Log in for full answers

Similar Questions

Using the following information calculate the GDP for this economy: Consumption of $5 000 Investment of $10 000 Government purchases of $3 000 Government transfer payments of $1 000 Exports of $6 000 Imports of $5 000

If consumption is $4000, exports are $300, government purchases are $1000, imports are $400, and investment is $800, then GDP is $5700.

If this economy has 1,200 workers in total, what is total GDP at time t, i.e., what is 𝑌 𝑡 ? Round your answer to the nearest integer. Hint: Take advantage of the fact that 𝐾 𝑡 = 𝑘 𝑡 × 𝐿 𝑡 and/or 𝑌 𝑡 = 𝑦 𝑡 × 𝐿 𝑡 .

Suppose C = $6T, I = $2T, G = $3T, EX = $1T, IM = $2T. GDP is:

If this economy has 1,000 workers in total, what is total GDP at time t, i.e., what is 𝑌 𝑡 ? Round your answer to the nearest integer. Hint: Take advantage of the fact that 𝐾 𝑡 = 𝑘 𝑡 × 𝐿 𝑡 and/or 𝑌 𝑡 = 𝑦 𝑡 × 𝐿 𝑡 .

In a small economy, gross investment in 2018 is $2500, consumption spending is $6000, net investment is $200, government spending is $1500, exports are $2000 and imports are $1000. What is GDP for this economy in 2018?

More Practical Tools for Students Powered by AI Study Helper

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ECON3020W04 ECON Quiz 1- Requires Respondus LockDown Browser