Asked by joseph sciotto on May 17, 2024
Verified
The value added at all stages of production sums to the market value of the final good,and the value added for all final goods sums to GDP based on the income approach.
Value Added
Value Added refers to the increase in value that a business creates by undergoing a production process, calculated as the difference between the cost of raw materials and the price of the finished product.
Income Approach
A method of calculating GDP that sums up total national income, including wages, rent, interest, and profits.
- Understand the methodology and significance of the value added approach in GDP calculation to avoid double counting.
Verified Answer
SR
Sergio RangelMay 23, 2024
Final Answer :
True
Explanation :
This statement is true as GDP can be measured both by the value added approach and the income approach, where the value added at each stage of production is added to calculate the final market value of the good and services, and eventually the income generated by these value added activities is summed up to calculate GDP.
Learning Objectives
- Understand the methodology and significance of the value added approach in GDP calculation to avoid double counting.