1) GDP does not include intermediate goods because
a. that would understate the true size of GDP.
b. intermediate goods are not useful to consumers.
c. that would count the value of intermediate goods twice.
d. intermediate goods are not valuable.
2) The dollar value of an industry's sales minus the value of intermediate goods is
a. NDP.
b. transfer payments.
c. value added.
d. GDP.
3)Which of the following is included in measuring GDP?
a. The value added at each stage of production of a final product.
b. The transfer of secondhand goods.
c. Household services rendered by homemakers.
d. The buying and selling of securities.
4) Value added is
a. the amount of dollar value contributed to a product at each stage of its production.
b. the dollar value contributed to a product at the last stage of its production.
c. the price of an intermediate product.
d. the sum of the prices of intermediate products.
value added is
1) The correct answer is c. that would count the value of intermediate goods twice.
To understand why intermediate goods are not included in GDP, it is important to know what GDP represents. GDP stands for Gross Domestic Product and is a measure of the total value of all final goods and services produced within a country's borders during a given period, usually a year.
Intermediate goods are goods that are used as inputs in the production of other goods. Including the value of intermediate goods in GDP would result in double-counting because their value would already be included in the final goods that are produced using them. This would overstate the true size of GDP.
2) The correct answer is c. value added.
Value added is the dollar value of an industry's sales minus the value of intermediate goods. It represents the additional value created at each stage of production. By subtracting the value of intermediate goods, we are left with the value added by the industry itself.
Value added is an important concept in measuring GDP because it allows us to avoid double-counting and accurately capture the economic contribution of each industry or sector to the overall economy.
3) The correct answer is a. The value added at each stage of production of a final product.
When measuring GDP, the value added at each stage of production of a final product is included. This means that the contribution made by each producer involved in the production process is counted towards GDP. It helps to avoid double-counting and provides a more accurate measurement of the value created within an economy.
However, it is important to note that the transfer of secondhand goods, household services rendered by homemakers, and the buying and selling of securities are not typically included in GDP, unless they are part of formal economic transactions and exchange of value.
4) The correct answer is a. the amount of dollar value contributed to a product at each stage of its production.
Value added refers to the amount of dollar value contributed to a product at each stage of its production. It represents the difference between the value of the final product and the cost of the intermediate goods or inputs used in its production.
At each stage of production, value added can be calculated by subtracting the value of intermediate inputs from the total value of the output. This allows us to measure the incremental contribution made by each producer in the production process, which is important in accurately estimating GDP and understanding the economic activity within an economy.
Value added is considered a key concept in national accounting and GDP calculations, as it helps capture the economic value generated at each stage of production.