Question

How do we count various goods and services for calculating Gross Domestic Product (G.D.P.)of a country? Explain with example.

Answer 1

Gross Domestic Product

Explanation:

Gross Domestic Product (GDP) is the total sum of the values of the final goods and services of the primary, secondary and tertiary sector of economy of a country, produced during a year.

The counting of various goods and services for calculating GDP can be explained as below:

Wheat and flour are intermediate goods used for making final products that are consumed like bread and biscuit. So, the value of intermediate products are not considered for GDP. The value of the final products that are consumed, like bread and biscuit, are added up for GDP calculation because the value of the ingredients (salt, sugar, oil, wheat) are already a part of the finished goods and need not be counted as intermediates.