What are intermediate goods? Why do economists exclude the value of intermediate goods while calculating national income?

Intermediate goods are goods used as inputs in the production of other goods. There would be a problem of multiple counting if we include the value of both intermediate goods and final goods. For example, if chips sold to computer manufacturers were included in GDP, we would count the same chip when it was sold to the computer maker and then again as a component of the computer when it was sold to a consumer. Only final goods and services count in the GDP.

Economics

You might also like to view...

Reverse causality can create confusion between correlation and causation. What does reverse causality imply?

What will be an ideal response?

Economics

For a monopoly, the value of the next worker equals

A) MR ? MPL. B) p ? MPL. C) MPL. D) w/MPL.

Economics