Why Does Gross Domestic Product NOT Include Intermediate Goods

question 14

Multiple Choice

Why does gross domestic product NOT include intermediate goods?  

• A) because intermediate goods are NOT part of investment spending 
• B) because the value of the intermediate goods is already included in the value of the final goods 
• C) because the value of the intermediate goods is already included as inventory investment 
• D) because intermediate goods are NOT part of current production

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Definitions:

Taxes

Mandatory payments made to the government, taken from individuals' earnings and company gains, or included in the prices of certain products, services, and dealings.

Short Run

The short run is a time period in which at least one input is fixed, limiting the ability of a firm to adjust to market changes.

Long Run

A period in which all inputs and factors of production can be varied, and all costs are variable, allowing for complete adjustment to changes.

Recession

A temporary downturn in economic activity, characterized by decreased trade and industrial production, usually recognized by consecutive quarters of declining GDP.