Question

What are intermediate goods and services? How are they counted in GDP?

1) They are goods and services used in the production process but not sold directly to consumers. They are counted in GDP as part of the value added at each stage of production.
2) They are goods and services sold directly to consumers. They are not counted in GDP.
3) They are goods and services used in the production process but not counted in GDP.
4) They are goods and services sold directly to consumers. They are counted in GDP as part of the final consumption expenditure.

Answer 1

Intermediate goods and services are goods and services used in the production process but not sold directly to consumers. They are not counted in GDP calculations to avoid double counting.

Step-by-step explanation:

Intermediate goods and services are goods and services used in the production process but not sold directly to consumers. They include items like raw materials, components, and parts that are used to construct final goods. These intermediate goods are not counted in GDP calculations to avoid double counting.

Gross Domestic Product (GDP) counts only the value of final output of goods and services, not the production of intermediate goods. This is to avoid counting the same output multiple times as it moves through the various stages of production. The value of intermediate goods is captured in the final products at the end of the production chain.