WBCS.LIVE practice question

Why are intermediate goods NOT included in the calculation of national income?

Solve this multiple-choice question and check the correct answer with its explanation below.

Answer options

  1. Including intermediate goods would result in double counting.
  2. Intermediate goods are not produced within the country’s borders.
  3. Including intermediate goods would decrease the value of national income.
  4. Intermediate goods are not important for measuring economic activity.

Correct answer and explanation

Correct answer: Including intermediate goods would result in double counting.