If Intermediate Goods and Services Were Included in GDP

question 75

Multiple Choice

If intermediate goods and services were included in GDP,

• A) then GDP would be overstated.
• B) then GDP would then have to be deflated for changes in the price level.
• C) nominal GDP would exceed real GDP.
• D) then GDP would be understated.

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Definitions:

Operating Activities

Activities that relate directly to the primary operations of a company, such as sales and service activities, and are reflected in the company's cash flows.

Net Income

The total profit of a company after all expenses, including taxes and operating costs, have been subtracted from total revenue.

Accumulated Depreciation

The total amount of depreciation expense that has been recorded for an asset since it was acquired, reflecting its decrease in value over time.

Cash Dividends

Payments made by a corporation to its shareholders out of its profits or reserves.