Why is value added used when calculating GDP?
Correct answer: A. To avoid counting the same output more than once
- A. To avoid counting the same output more than once
- B. To include household transfers in national output
- C. To convert nominal production into real production
- D. To measure only goods sold in foreign markets
Explanation
Value added at each production stage prevents intermediate goods from being counted repeatedly. Adding the full selling value at every stage would overstate the economy's actual final output.
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The economy is studied as a whole through national income, gross domestic product, inflation, unemployment, economic growth and business cycles. Coverage includes aggregate demand and supply, consumption and investment, money and banking, fiscal and monetary policy, exchange rates and balance of payments, which distinguishes macroeconomics from the study of individual markets.
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