If the Value of Intermediate Goods and Services Are Included

question 40

Multiple Choice

If the value of intermediate goods and services are included in GDP, then:

• A)GDP would be understated.
• B)GDP would act as a true indicator of economic welfare.
• C)there would be double-counting.
• D)there would be undercounting.
• E)GDP would be able to give a clearer picture of the economy.

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Definitions:

Invisible Hand Principle

Adam Smith's concept that self-interested behaviors in a free-market economy lead to economic benefits for all.

Competitive Markets

Markets characterized by a high level of competition where no single buyer or seller can influence prices significantly, leading to efficient distribution of resources.

General Welfare

General welfare refers to the overall health, prosperity, and happiness of a population.

Invisible Hand Principle

Adam Smith's concept that individuals' self-interested actions can lead to positive social and economic outcomes, guided as if by an invisible hand.