Question
A studentremarks: Itdoesn't make sense that intermediate goods are not counted in GDP. A cotton is an intermediategood, and without it a shirt won't beproduced.
A studentremarks: "Itdoesn't make sense that intermediate goods are not counted in GDP. A cotton is an intermediategood, and without it a shirt won't beproduced. So whydon't we count the cotton inGDP?" Provide an answer for thestudent's question.
A.
There is no value added in the production of cotton. Therefore, it is not included in thevalue-added method of measuring GDP.
B.
The value of the cotton is not directly counted inGDP, but it is included in thevalue-added method of measuring GDP.
C.
The value of the cotton is related to transfer payments that are not included in GDP because they are not received in exchange for producing a new good or service.
D.
The value of both final goods and intermediate goods is included in the calculation of GDP.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Management And Cost Accounting
Authors: Colin Drury
5th Edition
9781861525369
