Question

Double counting in the national income accounts will be avoided if GDP is computed by totaling all:_____

A. sales of final output.
B. sales of final output and intermediate goods.
C. sales.
D. production costs.

Answer 1

A. sales of final output.

Step-by-step explanation:

GDP is an expression of a country's size of the economy. It is a measure of the total value of a country's output in a specific period. In calculating the GDP, economics will consider the total of final goods and services produced in an economy, multiply them by their prices and sum them up.

Double-counting describes a situation where some goods and services are counted more than once when computing GDP. Economists consider only the final output in calculating GDP. Not using intermediate goods avoids double-counting. Intermediate goods are not final products. They are used to produce more goods and services.