By Not Counting the Value of Intermediate Goods When Calculating

question 269

Multiple Choice

By not counting the value of intermediate goods when calculating GDP, you avoid

• A) deficit spending.
• B) double counting.
• C) black-market accounting.
• D) year-to-date calculations.

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Definitions:

Real GDP

Gross Domestic Product adjusted for inflation, measuring the value of goods and services produced by an economy in a given year, expressed in base-year prices.

Nominal GDP

GDP based on prices prevailing at the time of production.

Price Level

A measure of the average prices of goods and services in an economy at a specific point in time.

Aggregate Demand Curve

A graphical representation showing the relationship between the overall price level in an economy and the total demand for goods and services at that price level.