Economics Fall 17 -Awijeweera Quiz: Chapter 21 CYU Assignment Sim Casts Submit Q

Question

Economics Fall 17 -Awijeweera Quiz: Chapter 21 CYU Assignment Sim Casts Submit Quiz MA This Question: 1 pt 9 of 10 (0 complete) | > | This Quiz: 10 pts possibl OKS DY A bakery uses flour to produce bread. When calculating GDP, we include value of the flour to the value of the loaf of bread to calculate GDP, the result is , because when we add the A. both the value of the bread sold in a store and the value of the flour used to produce the bread; O B. both the value of the bread sold in a store and the value of the flour used to produce the bread O C. only the value of the flour used to produce the bread, O D. only the value of the bread sold in a store; double counting the true value of the economy's output double counting double counting

Explanation / Answer

the answer is D -) only the value of the bread sold in a store. double counting.

that is - when we estimating GDP, we only include the value of the finished good in estimating the GDP , we do not include intermediate good. and bread is a final good while flour is a intermediate good. therefore. we only include bread in the GDP . and if we include both of them there is a problem of double counting.

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