Question

Why do we not count the value of intermediate goods and services in gross domestic product? Does the value of intermediate goods and services show up in gross domestic product? If so, how? Briefly explain.

Answer 1

• In the definition it is said that dross domestic product is a measurement of all final goods and services produced in an economy. Intermediate goods and services are not a factor while calculating the gross domestic product because when when we consider intermediate goods and services Then it will be counted twice.
• For example when a product passes through 4 manufacturing stages M1, M2, M3 & M4 and then as a final product, at these all stages it is counted so there will be total number of 5 count will come but there is only one product. That is why intermediate goods and services will not consider for gross domestic product.
• No, there is no chance of showing up the intermediate goods and services in the gross domestic product.