Which of the following is usually excluded when measuring a country's Gross Domestic Product (GDP)?
Show answer & explanation
Correct answer: C
Explanation
The correct answer is option 3 i.e. The value of intermediate goods used in production.
Intermediate goods are excluded from GDP calculations to avoid the problem of double counting. GDP is intended to measure the total market value of all final goods and services produced within a country. Since the value of intermediate goods (like flour used to bake bread) is already included in the market price of the final product (the bread), adding them separately would artificially inflate the GDP figure, leading to an inaccurate representation of the economy's actual output.
Other Options:
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Consumer spending (C) & Government expenditure (G): These are core components of the expenditure method (C and G), representing final consumption by households and the state.
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Net exports: This calculates the contribution of foreign trade to the domestic economy by subtracting total imports from total exports (X - M).