Question:
According to the value added method, Gross Domestic Product is calculated by
(1) subtracting the value of intermediate goods from the value of output.
(2) adding the value of all final goods and services produced.
(3) adding the total income generated in an economy.
(4) adding the value of all intermediate goods used in production.
(5) subtracting the value of imports from the total value of output.
Correct Answer:
(1)
Answer Explanation:
The Value Added approach to calculating GDP aims to avoid the double counting of resources. It strictly measures the new value created at each stage of production. This is done mathematically by taking the Gross Value of Output and subtracting intermediate consumption (the value of intermediate goods used up in the process).
Topic: National Income Year: 2024
Leave a Reply